MASTER 

NEGATIVE 
NO.  94-82281 


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Author: 


Hallett,  Eugene  Russell 


Title: 


Public  utilities  act  of 
California 

Place: 

[San  Francisco] 

Date: 

[1912] 


9f^i2Mi-3 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


MASTER   NEGATIVE   # 


ORIGINAL  MATERIAL  AS  FILMED  -    EXISTING  BIBLIOGRAPHIC  RECORD 


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Hallett,  Eugene  RusseU,  187&-        com^. 
Public  utilities  act  of  California  ...    Comp.  bv  Eugene 

?;!  S  V"'''"- ^''  Louis  Sloss  &  CO.,  investment  secui^ 
ties,  San  Francisco  ...  San  Francisco  .Bolte  &  Braden 
company,  pnntersj  1912.  ^  ^ihucii 

5  p.  I.,  rl7)-299  p.    24^*. 
^  Compiled  for  distribution  by  the  Statistical  department  of  Uuis  SIoss 

(Continued  on  next  card) 
is24tl] 


Buslneis 
535.3 

H15 


^ 


1 


RESTRICTIONS  ON  USE: 


Hallett,  Eugene  Russell,  1878-       comp.       Public  utili- 
ties  act  of  California  ...     [1912]     (Card  2) 

CoNTENTs.-Introduction  ibv)  J.  M.  Eshleman.-Biographics  of  commis- 
sioners--The  act  and  its  relation  to  the  public  fby,  Max  Thelen-VaSon 

^nS^;;!^!-  ""T'xi*'^' ^u  {^'  I^;^^"^'- -Leading  railroad  and%k^^^ 
^mmissions  ,by  Max  Thelen,--Constitutional  amendment  no.  50.--ConsH  u 
t^nal  amendmen    no.  6.-Constitutional  amendment  no.  47.-Public  miS 
mission.  "^*-P"'^''^  "^'''*'«  act-Rules  of  practice  and  procedure  of  com- 

f  ?iti?"^''-^  ^V"^  commissions-California.     2.  Corporations-California 
I.  C5l.forn.a.     Uws,  statutes,  etc.    ir.  Sloss,  LoiTTs.  &  ca.  San  Francisco 


Library  of  Congress 

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3D'=>35 . 3 


W^ 


Columbia  ?Bmbersittp 


LIBRARY 


School  of  Business 


Introduction  by  President  o(  Commission 

Biographies  of  Commissioners 

The  Act  and  its  Relations  to  the  Public 

Valuation  o(  Public  Utilities 

Leading  Railroad  and  Public  Service  Commissions 

Constitutional  Amendment  No.  50 

Constitutional  Amendment  No.  6 

Constitutional  Amendment  No.  47 

Public  Utilities  Election  Act 

PubUc  Utifities  Act 

Rules  of  Practice  and  Procedure  of  Commission 


compiled  by 
eugem:  r.  hallett.  manager 

LOUIS  SLOSS  &  CO..  Inveftment  Securities 

SAN  FRANCISCO 
1912 


COPYRIGHTED  1912 

LOUIS  SLOSS  &  COMPANY 

INVESTMENT  SECURITIES 

ALASKA  COMMERCIAL  BUILDING 
FraadKo.  Cal. 


_3   S35.3 

H\5 


ll 


JBoUt  &  tBtmitn  Company 

THntm 

Smt  Frmndtco,  CaHfornIa 

1912 


ci 
J   ^ 


A. 


Pref 


ace 


The  passage  of  the  "Public  Utilities  Act",  which  went  into 
etfect  March  23rd.  1912.  marked  the  beginning  of  a  new  era  in 
the  progress  and  development  of  the  public  service  corporation  in 
California.  We  have  attempted  to  make  this  little  book  the  genesis 
of  public  service  commission  history  in  this  State.  The  introduction 
by  President  Eshelman  outlines  the  attitude  of  the  G)mmission 
toward  the  corporations  under  its  jurisdiction.  The  chapter  devoted 
to  "The  Act  and  Ito  Relation  to  the  Public**,  by  Commissioner 
Thelan.  who  is  also  attorney  for  the  Commission,  outlines  some  of 
the  things  which  the  Commission  expects  to  accomplish  in  bringing 
about  cheaper  and  better  service  for  the  public.  The  views  of  these 
two  men.  who  have  perhaps  been  the  most  instrumental  in  placing 
this  Act  on  the  statute  books,  are  of  particular  interest  as  indicating 
the  future  policy  of  the  Commission. 

The  fundamental  element  in  determining  the  cost  of  service  is 
physical  valuation  of  property.  Through  the  courtesy  of  the  local 
manager  of  one  of  the  largest  engineering  corporations  in  the 
United  States,  we  are  enabled  to  include  a  chapter  showing  the 
thoroughness  and  exactness  of  such  a  valuation  when  the  work 
is  done  by  modern,  scientific  methods.  This  firm  is  now  making 
complete  physical  valuations  of  the  properties  of  the  Spring  Valley 
Water  Co.,  Pacific  Gas  &  Electric  Co..  Pacific  Light  and  Power 
Corporation.  San  Joaquin  Light  and  Power  Corporation,  and  a 
number  of  other  public  service  corporations  in  California  and  else- 
where. As  the  securities  of  these  corporations  held  in  California 
amount  in  value  to  millions  of  dollars,  we  considered  the  methods  used 
in  ascertaining  the  physical  valuations  of  their  properties  would  be  of 
much  interest  to  the  readers  of  this  book. 

We  devote  a  chapter  to  Commissioner  Thelen*s  report  entiUed 
"Leading  Railroad  and  Public  Service  Commissions  of  the  United 
States**,  as  it  was  largely  upon  the  information  contained  in  this 
report  and  the  recommendations  which  accompanied  it  that  the  Act 


was  drawn.  The  discustiont  therein  not  only  show  the  trend  of 
public  service  commission  legislation  in  the  various  States,  but  also 
the  theory  on  which  much  of  this  legislation  it  based. 

For  convenience  as  a  book  of   reference,   the  **Public  Utilities 
Act**  has  been  carefully  annotated  and  indexed,  and  tfie  important 
sections  relating  to  the  issuance  of  securities  have  been  set  in  black- 
face type.     The  volume  has  been  compiled  for  distribution  by  the 
Statistical  Department  of  Lx)UlS  Sloss  &  Co.  in  an  endeavor  to 
provide  a  work  of  interest  to  the  busy  corporation  official  and  the 
student  of   public   service   corporation   legislation   as   well,   and   to 
further  disseminate  among  investors,  both  institutional  and  private, 
a  larger  knowledge  of  the   fundamental  principles   underlying  this 
recent  legislation  and  by  so  doing  to  develop  a  keener  appreciation 
of  the  added  elements  of  safety  and  strength  back  of  the  stocks  and 
bonds  of  California  public  service  corporations  which  come  under 
the  jurisdiction  of  this  Act 

Eugene  R.  Hallett. 
March  25th.  1912. 


Contents 


Introduction -^ '^ 

John  M.  Eshleman.  Pietkle&t  ci  Commution 

Biographies  of  Committionen        *^ 

The  Act  and  it»  Relations  to  the  Public        '7 

Max  Thelen,  Comminioner  and  Attorney  for  the  Commission 

Valuation  of  Public  Utilities 25 

Henry  A.  Lardner,  Manager  San  Francisco  Office 
J.  C  White  &  Co..  Engineers 

I  ^•i4mg  Railroad  and  Public  Senrice  Commissions 35 

Constitutional  Amendment  No.  50 '55 

Constitutional  Amendment  No.  6 157 

Constitutional  Amendment  No.  47 161 

Public  Utilities  Election  Ad 163 

Public  UtUities  Act 175 

Rules  of  Practice  and  Procedure  of  Commission 243 

General  Index 273 


'1 

I 


ii 


Railroad  G)ininission  State  of  GJifomia. 


COMMISSIONERS 

J.  M.  Eihlcman.  President 

H.  D.  Lovcland 

Alex  Gordon 

E.  O.  Edgcrton 

Max  Thelen,  Attorney 


Giarles  R.  Detrick 

H.  H.  Sanborn 

R.  A.  Thompson 

H.  C.  Hazzard 

L  R.  Reynolds 
Paul  Sinsheimer 


Sccrelaiy 

Rate  Elxpert 

Chief  Engineer 

Service  Expert 

Auditor 

Stock  and  Bond  Elxpert 


1 1 ' 

I 


Introduction. 


BY 


JOHN  M.  ESHLEMAN. 

President  of  the  Railroad  Commission  of  the 
State  of  California. 


In  a  little  more  than  a  year,  California  has  made  more 
fundamental  changes  in  its  laws  affecting  public  utilities  than 
have  been  brought  about  in  most  states  in  a  quarter  of  a  century. 
These  changes  must  necessarily  be  of  interest  to  the  dealers  in 
securities.  I  am  optimistic  enough  to  believe  that  to  the  dealers  in 
legitimate  securities,  they  will  be  of  inestimable  benefit.  A  bond 
is  to  all  intents  and  purposes  a  mortgage.  It  constitutes  a  lien 
upon  certain  property.  It  is  to  the  interest  of  those  who  hold 
liens  on  property  to  know  that  the  property  is  ample  to  secure 
their  lien.  While  the  bringing  about  of  this  result  is  not  the 
prime  object  of  regulation  of  public  utilities,  yet  it  is  one  of  the 
necessary  results.  The  interests  of  the  public  and  the  corporation 
in  this  regard  are  the  same.  Too  often  in  the  past  liens  have 
been  created  upon  corporate  property  through  bond  issues  and 
the  money  realized  from  such  bonds  diverted  from  the  legitimate 
needs  of  the  corporation,  to  make  large  profits  for  the  promoter 
and  the  corporation  official,  who  makes  use  of  the  corporation  to 
amass  for  themselves  private  fortunes.  The  public  becomes  inter- 
ested because  it  is  from  the  public  that  the  interest  on  the  bonds 
and  the  money  necessary  to  retire  them  at  maturity  must  be 
collected  through  the  medium  of  rates.  The  proceeds  from  bonds, 
then  become  in  effect  a  trust  fund  which  should  be  utilized  in 
the  production  of  a  property  which  will  adequately  furnish  the 
service  which  the  public  has  a  right  to  demand  at  reasonable  rates. 

Therefore,  although  a  menace  to  those  who  desire  to  profit 
at  the  public  expense,  yet  the  Public  Utilities  Act,  as  it  now 
sUnds  upon  the  Statute  Books  of  California,  is  to  be  the  best 
interest  of  the  financier,  who  must  advance  capital,  the  corporation,  who 
should  utilize  it,  and  the  people  at  large,  who  must  ultimately  repay  it 

March  23,  1912. 


I 


Biographies  of  Commissioners 

John  Morton  Elshleman 

John  Morton  Eshlcman  (Republican)  was  born  at  Villa  Ridfi^. 
Illinois.  June  14.  1876.  and  came  to  California  March  2.   1896. 
He  worked  in  a  raOroad  camp  of  the  Southern  Pacific  Company, 
during  which  time  he  studied  to  prepare  himself  for  admission  to 
the  University,  entering  the  University  of  California  m  1898.     In 
1902  he  took  his  A.   B.  with  highest  honors   and  in    1903   the 
degree   of   Master   of   Arts.      He  was   admitted   to  the   bar   and 
appointed  deputy  state  labor  commissioner  under  Governor  Pardee 
and  Commissioner  W.  V.  Stafford.     He  represented  the  52nd  Dis- 
trict   (Berkeley)   in  the   37th  session  of  the  legislature.      He  was 
appointed,  under  District  Attorney    (now  Superior  Judge)   Everett 
J    Brown,  deputy  district  attorney  of  Alameda  County,  but  was 
compelled  by  his  health  to  remove  to  the  Imperial  Valley.     On  the 
formation  of  Imperial  County.  August.   1907.  Mr.  Eshleman  was 
elected  its  first  district  attorney,  serving  out  his  term.     In  November, 
1910.  he  was  elected  railroad  commissioner  from  the  third  district 
and  chosen  as  president  of  the  Commission  in  January.  1911. 

Alexander  Gordon 

Alexander  Gordon  (Republican),  was  bom  in  Hants  County. 
Nova  Scotia.  October  16.  1846.  He  received  a  common  school 
education  and  was  brought  up  on  a  farm.  In  1869  he  moved 
to  California,  settling  in  San  Joaquin  County,  where  he  engaged 
in  the  sheep  raising  industry.  In  1875  he  moved  to  Fresno  and 
began  the  growing  of  raisins  on  a  large  scale.  Since  1901  he  has 
made  his  residence  in  Sacramento,  where  he  became  the  vice  presi- 
dent and  director  of  the  Sacramento  Bank.  From  1903  to  1907 
he  served  as  member  of  Auditing  Board  to  Commission  of  PubUc 
Worb.  From  1907  to  1911  he  served  as  member  of  Onsultmg 
River  Board.  Department  of  Engineering.  Elected  member  of 
Railroad  Commission  November  8.   1910.  from  the  First  Dittnct 


Harvey  D.  Loveland 

Harvey  D.  Loveland  (Republican)  was  bom  in  New  York  in 
1853  and  received  his  education  in  the  schools  of  that  State.  For 
nine  years  he  taught  school  in  New  York  and  Kansas,  to  which 
latter  State  he  moved  in  1 876.  where  he  read  law  and  was  admitted 
to  the  bar  in  1881.  but  after  practicing  for  a  few  years  engaged  in 
mercantile  atfairs.  to  which  he  has  since  given  his  attention.  He 
became  a  resident  of  San  Francisco  in  1887.  For  several  years 
he  was  connected  with  two  of  the  largest  mercantile  institutions  on 
ifae  coast  He  has  always  taken  a  lively  interest  in  public  affairs; 
was  for  six  years  president  of  the  Pacific  Coast  Jobbers*  and  Manu- 
facturers* Association;  has  also  recently  retired  from  the  presidency 
of  the  Transmississippi  Commercial  Congress.  As  traffic  director 
and  later  as  president  of  the  Pacific  Coast  Jobbers*  and  Manufacturers* 
Association,  he  assisted  in  accumulating  the  evidence  and  prosecuting 
the  tuilB  before  the  Interstate  Commerce  Commission  in  defense 
of  the  jobbing  interests  of  the  coast  in  what  are  known  as  |he 
St  Louis  Case,  the  State  Toll  Case,  the  Spokane  Case,  and  others. 
He  is  vice-president  of  the  International  Mercantile  and  Bond  Com- 
pany, and  president  of  the  Merchants  and  Manufacturers*  Securities 
Company.  Mr.  Loveland  is  also  prominent  in  Masonic  circles  and 
is  Past  Grand  Commander  of  the  Grand  Commandery  of  Knights 
Templar  of  California.  He  was  a  member  of  Governor  Pardee's 
staff  and  is  paymaster  general  of  Governor  Gillett*s  staff,  with  the 
rank  of  Colonel.  He  was  appointed  Railroad  Commissioner  for  the 
Second  District  by  C^vemor  J.  N.  Gillett  November  23,  1907, 
to  succeed  Andrew  M.  Wilson,  resigned.  He  was  elected  a  member 
of  the  Railroad  Commission  November  8.  1910.  from  the  Second 
District 


Edwin  O.  Edgerton 

Born  in  Yreka.  California.  January  8th.  1876.  Educated  in 
the  common  schools  and  University  of  Southern  California.  Admit- 
ted to  the  bar  in  1898.  Practiced  law  eleven  years  in  Los  Angeles, 
California.  Became  secretary  of  Municipal  League  March,  1909. 
Appointed  member  of  the  Sute  Railroad  Commission  March 
I3th.  1912. 


Max  Thelen 

Bom  in  Nebraska   1880.     Came  to  San  Diego  County.  Cali- 
fornia, in  1888.   Graduated  from  National  City.  San  Diego  County, 
public  schools  and  High  School.      Worked   five  years  on   ranch. 
Entered  University  of  California  August,   1900;  graduated  May, 
1904.     Harvard  Law  School  1904  to  1906.     In  office  of  Obey 
&   Olney.    attorneys-at-law,   San   Francisco,    November.    1906   to 
May    1907.     Assistant  attorney   and   then   attorney   for  Western 
Pacific  RaUway  Company  from  May  1907  to  April  191 1.    Attor- 
ney  California   Sute   Railroad   Commission   April    1911    to  date. 
Appointed  member  Raihroad  Commission  March  13th.  1912.     First 
secretary    and    organizer    Berkeley    Lincoln-Roosevelt    Republican 
Club.     Vice-president  City  Club  of  Berkeley.     Member  Common- 
wealth Qub  of  San  Francisco.  University  of  California  Club,  and 
American  Society  International  Law.     Lecturer  International  Law 
University  of  California.     Joint  author  with  John  M.  Eshleman  of 
Public  Utilities  Act 


The  Public  Utilities  Act  and  Its  Relation 

to  the  Public. 


BY 


MAX  THELEN, 

Commissioner  and  Attorney, 
of  the  Railroad  Commission  of  the  State  of  California. 


The    Railroad   Commission    of   California    was    created   by    the 

Constitution  of   1879.      For  more  than  thirty  years  its  jurisdiction 

was    confined    to    "railroad    and    other    transportation    companies," 

and  as  to  these  companies  the  Commission  had  power  only  to  fix 

rates  and  to  prescribe  a  uniform  system  of  accounts.     Finally,   in 

March.    1911,  the  legislature  submitted  to  the  people  of  this  state 

three    constitutional    amendments,    the    purpose    of    which    was    to 

remove   certain   obstacles   in   the   Constitution   to   the   Commission's 

effective  jurisdiction  over  railroad  and  other  transportation  companies 

and   to   authorize   the   legislature   to   confer   upon   the   Commission 

broad    powers    of    regulation    and    control    over    the    other   public 

utilities  of  the  state  as  well.      The  Railroad  Commission,   antici- 

pating  the  adoption  of  the  constitutional  amendments  by  the  people 

on   October    10.    1911.    sent   the   writer,    during    the   summer   of 

1911.  to  visit  the  leading  railroad  and  public  service  commissions 

of  the  country.     The  writer  made  a  careful  study  of  the  actual 

working  of  some  twelve  of  the  leading  commissions  of  the  country 

and  of  the  statutes  under  which  they  operate,  and  on  his  return 

drafted,    together    with    President    John    M.    Eshleman    of    the 

Commission,   the  new  Public  Utilities  Act      The  widest  possible 

publicity   was   given    to    the   bill    after    the   first   draft   had    been 

prepared,  and  the  pubhc  utilities  affected  were  given  every  oppor- 

hrnity.  both  at  public  hearings  and  by  correspondence,  to  present 

fully  their  objections  to  the  bill,  and  over  fifty  of  the  leading  public 

service  corporations  of  the  state   availed   themselves,   through   their 

reprwentabves,  of  the  opportunity  so  given.    The  bill  was  introduced 

?0I  1     u     fl*"*    **   ^^  extraordinary   session   of   the   legislature   of 

•      L     A  '  ^  ^"™***  °°  November  28,    1911,  and 

m  the  Assembly  on  the  same  day  by  Hon.   W.  A.  Sutherland. 


-.= .  :..,..,jm. 


Il 


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t/ 


It  passed  the  Assembly  on  December  12.  1911,  by  the  vote  of 
68  to  1 ,  and  the  Senate  on  December  16.  1911.  by  the  vote  of 
23  to  0.  was  signed  by  Governor  Johnson  on  December  23.  191 1, 
and  became  effective  on  March  23.  1912. 

The  Act  will  be  discussed  under  the  following  heads:  (1)  die 
Railroad  G)mmission;  (2)  duties  of  public  utilities;  (3)  powers 
and  duties  of  the  Railroad  Commission;  (4)  procedure  before  the 
Railroad  Commission;  (5)  procedure  before  the  courts;  (6) 
effect  of  the  Act  on  existing  powers  of  incorporated  cities  and 
towns;    and  (7)  organization  of  the  Commission  for  its  worL 

1.    The  Railroad  Commission. 

Tlie  reorganized  Railroad  Commission  consists  of  five  members — 
President  John  M.  Eshleman,  H.  D.  Loveland.  Alex  Gordon, 
Edwin  O.  Edgerton,  and  Max  Thelen,  who  is  also  attorney  for 
the  Commission.  The  terms  of  these  commissioners  will  expire 
on  January  1.  1915.  The  Governor  will  thereupon  appoint  one 
commissioner  to  serve  until  January  1.  1917.  two  to  serve  until 
January  1.  1919.  and  two  to  serve  until  January  1,  1921.  The 
terms  thereafter  will  be  six  years.  The  salary  of  the  commissioners 
is  $6,000  per  annum.  Each  commissioner,  when  designated  by  the 
Commission,  has  power  to  hold  any  investigation,  hearing  or  inquiry, 
but  the  order  of  a  commissioner  must  be  approved  by  the  Com- 
mission before  its  becomes  effective.  It  follows  that  all  the 
commissioners  may  hold  separate  hearings  at  the  same  time.  In 
this  way,  the  capacity  of  the  Commission  for  work  has  been 
greatly  augmented.  The  office  of  the  Commission  is  in  San 
Francisco,  but  hearings  are  held  in  such  parts  of  the  state  as  best 
subserve  the  convenience  of  all  parties  affected. 

The  Railroad  Commission  is  given  power  to  regulate  and  control 
all  the  public  utilities  of  the  state,  except  that  the  incorporated 
cities  and  towns  of  the  state,  including  the  city  and  county  of 
San  Francisco,  retain  tfie  powers  over  public  utilities  which  they 
had  on  March  23,  1912,  with  the  privilege,  however,  of  voting 
those  powers  into  the  Railroad  Commission.  Public  Utilities  are 
defined  to  include  the  corporations  or  persons  which  own,  control, 
operate  or  manage  railroads;  street  railroads;  express  companies; 
sleeping,   dining,   fruit  and  other  car  companies;    vessels  regularly 


THE  PUBLIC  UTILITIES  ACT. 


engaged  m  transportation  over  regular  routes  between  pomts  within 
this  state;  pipe  lines;  gas  plants;  electric  plants;  telephone  lines; 
telegraph  Imes;  water  systems;  public  wharves;  and  warehouses 
used  m  connection  with  the  transportation  of  property  by  a  common 
earner  or  vessel,  or  the  loading  or  unloading  of  the  same. 

The  name  Railroad  Commission  is  preserved  for  die  reason  that 
this  IS  the  name  given  by  the  Constitution  to  the  body  upon  which 
the  legislature  is  authorized  to  confer  these  additional  powers. 

2.     Duties  of  Public  Utilities. 

All  charges  made  by  public  utilities  must  be  just  and  reasonable. 
Their   service,    instrumentalities,    equipment   and    facilities   shall   be 
•uch  as  will  promote  the  safety,  health,  comfort  and  convenience 
of    theur    patrons,    employees    and    the    public      Their    rules    and 
regulations  must  be  just  and  reasonable.     They  must  file  with  the 
Commission    schedules    or    tariffs    showing    their    rates,    fares    and 
charges  and  can  change  the  same  only  on  30  days'  notice  unless  a 
lesser    time    is    authorized    by    the    Commission.      No    increase    in 
rates,  fares  or  charges  may  be  made  without  the  permission  of  the 
Commission   after  a  showing  justifying  the  increase.      No  free  or 
reduced    rate    transportation    or   service    may    be    given    except    as 
specifically  authorized  by  the  Act     Preferences  and  discriminations 
are   made   unlawful.      Common   carriers   are    forbidden   to   charge 
more  for  transportation   for  a  shorter   than   for  a  longer  distance 
over  the  same   line   or   route   in   the   same   direction   except   after 
securmg   the   permission   of   the   Commission:     a   similar   provision 
u    made    applicable    to    telephone    and     telegraph    corporations. 
KaUroad  corporations  must  in  proper  cases  provide  on  their  own 
properly  such  connections,   spurs  and  tracks  as  may  be  necessary 
to  acconmiodate  the  needs  of  shippers.     Street  railroads  under  die 
conhx)!  of  die  Commission  may  not  charge  more  than  five  cents  for  a 
conlmuous  nde  m  die  same  general  direction  within  die  limits  of 
any  city  or  town  except  on  a  showing  before  the  Commission  that 
the  greater  charge  is  justified.     AU  public  utilities  must  furnish  the 
information   concerning   dieir  business   which   may   be   required   by 
the   Commission   and   permit   free    access   to   dieir   records    to    die 
representatives  of  die  Commission  and  comply  fully  wiU  aU  orders 
and  directions  of  die  Commission. 


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LOUIS  SLOSS  8c  CO. 


3.    Powers  and  Duties  of  Commission. 

The  Railroad  Commission  is  given  very  wide  powers  over  the 
public  utilities  of  the  state.  The  Commission  is  given  power,  among 
others — 

(a)  To  fix  all  rates,  fares,  charges  and  classifications. 

(b)  To  establish  through  routes  and  joint  rates,  fares  and 
charges. 

(c)  To  investigate  all  interstate  rates,  fares  and  charges 
atfecting  this  state  and  to  apply  to  the  Interstate  Commerce  Com- 
mission or  to  any  court  of  competent  jurisdiction  for  relief. 

(d)  To  prescribe  just,  reasonable,  safe  and  proper  service, 
equipment,  facilities  and  methods. 

(c)  To  prescribe  additions,  extensions,  repairs  and  improve- 
ments. 

(/)  To  direct  that  additional  cars  or  trains  be  operated  and 
that  trains  stop  with  greater  frequency  and  at  proper  places. 

(g)  To  direct  connections,  in  proper  cases  between  the  tracks 
of  railroad  or  street  railroad  corporations. 

(h)  To  direct,  in  proper  cases,  that  switch  connectioDS  and 
spurs  be  installed. 

(i)  To  direct  that  physical  connections  and  joint  rates  over 
two  or  more  telephone  or  telegraph  lines  be  established  in  specified 
cases. 

(/)  To  direct  the  use,  in  proper  cases,  by  one  public  utility 
of  a  part  of  the  property  of  another  utility,  on,  over  or  under  any 
street  or  highway. 

(k)  To  direct  the  installation  of  safety  appliances  and  other 
devices  to  safeguard  the  health  and  safety  of  employees,  patrons 
and  the  public. 

(I)  To  regulate  crossings  of  railroad  tracks  and  streets  or 
highways  in  specified  cases. 


THE  PUBUC  UTIUTIES  ACT. 


(m)  To  investigate  the  cause  of  accidents  and  to  take  steps 
to  prevent  their  recurrence. 

(n)  To  provide  demurrage  rules,  and  rules  for  the  collection 
and  delivery  of  express  packages  and  telephone  and  telegraph 
messages. 

(o)  To  fix  standards,  classifications,  measurements  and  practices 
of  gas,  electrical  and  water  corporations. 

(p)  To  ascertain  the  value  of  the  property  of  every  public 
utOity. 

(q)  To  establish  uniform  systems  of  accounts  for  each  class 
of  public  utility. 

(r)  To  permit  or  refuse  to  permit  new  street  railroad,  gas, 
electrical,  telephone  or  water  corporations  to  enter  a  field  already 
served  by  an  existing  corporation  of  like  kmd. 

(s)  To  permit  or  refuse  to  permit  corporations  mentioned  in  (r) 
to  exercise  rights  under  new  franchises  or  permits. 

(0  To  regulate  transfers  of  the  property  used  in  the  public 
service  of  public  utilities,  except  express  corporations,  wharfingers 
and  warehousemen,  and  the  acquisition  by  one  public  utility  of 
stock  in  another  utility. 

(u)  To  regulate  and  control  the  issues  of  stocks,  bonds  and 
other  evidences  of  indebtedness  of  all  public  utilities  within  the  stale. 

4.    Procedure  Before  Railroad  Commission. 

Any  person  or  corporation,  chamber  of  conunerce.  board  of 
trade,  or  any  civic,  commercial,  traffic,  agricultural  or  manufacturing 
association  or  organization  or  any  body  politic  or  municq>al 
corporation  may  by  petition  in  writing,  filed  with  the  Commission, 
complain  of  any  act  done  or  omitted  to  be  done  by  any  public 
utility  in  violation,  or  claimed  to  be  in  violation,  of  any  provision 
of  the  act  or  any  order  or  rule  of  the  Commission.  Public  utilities 
have  the  same  right  to  complain.  Hearings  and  investigations  may 
also  be  held  by  the  Commission  on  ite  own  initiative.  The  Com- 
mission has  adopted  Rules  of  Practice  and   Procedure  specifying 


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LOUIS  SLOSS  &  CO. 


in  detail  the  steps  necessary  to  be  taken  by  parties  desiring  to  file 
formal  complaints  or  applications  with  the  Commission.  These  rules 
provide  a  procedure  which  enables  the  Commission  to  get  at  the 
heart  of  a  controversy  or  application  simply  and  speedily,  without 
regard  to  the  technical  rules  of  evidence  or  procedure.  A  copy 
of  these  rules  may  be  secured  by  any  citizen  upon  application  to 
the  Commission.  Hearings  are  held  before  the  Commission  sitting 
en  banc  or  before  a  commissioner  designated  for  that  purpose. 
After  the  hearing,  the  Conmiission  files  its  decision,  which  goes  into 
etfect  within  twenty  days  unless  otherwise  specified  in  the  order. 

5.    Procedure  in  the  Courts. 

Tlie  provisions  concerning  procedure  on  appeals  m  the  courts 
from  orders  of  the  Commission  have  been  drawn  with  considerable 
care  for  the  purpose  of  securing  a  procedure  which  should  be 
simple  and  expeditious  and  should  properly  protect  the  Commission 
and  the  public.  No  cause  of  action  may  arise  in  any  court  out 
of  any  order  or  decision  of  the  Commission  except  to  a  person  or 
corporation  which  shall  first  have  asked  the  Commission  for  a 
rehearing.  The  Commission,  if  it  finds  that  it  has  made  an  error, 
can  thus  modify  its  decision  before  litigation  in  the  courts  results. 
If  the  rehearing  is  denied,  or  if  after  a  rehearing  the  Commission 
reaffirms  its  order,  any  party  feeling  aggrieved  may  go  directly  to 
the  state  supreme  court  for  a  review  of  the  question  whether  the 
Commission  acted  within  its  authority  in  making  its  order  or  decision. 
On  the  hearing  before  the  supreme  court,  no  new  evidence  may  be 
introduced,  but  the  matter  must  be  disposed  of  on  the  evidence 
presented  to  the  Commission.  In  this  way  the  public  utilities  will 
be  compelled,  as  they  should  be,  to  present  their  evidence  before 
the  Conunission,  instead  of  holding  it  back  and  then  going  to  the 
courts  and  presentmg  great  masses  of  new  and  additional  evidence 
which  the  Commission  did  not  have  before  it  when  it  rendered  its 
decision.  The  findings  and  conclusions  of  the  Commission  on 
questions  of  fact  are  made  final,  thus  preventing  the  great  abuse  of 
a  complete  re-trial  in  the  courts  of  a  case  on  its  facts.  If  the  court' 
suspends  the  order  or  decision  of  the  Commission,  pending  the 
hearing  on  the  review,  the  party  petitioning  for  the  review  must 
file  a  bond  to  protect  the  parties  injuriously  affected  by  the  delay 


THE  PUBUC  UTILITIES  ACT. 


23 


m  the  enforcement  of  the  Commission's  order,  and  if  the  Com- 
mission's order  reduced  rates  or  fares,  the  supreme  court  must  direct 
the  public  utility  affected  to  pay  into  court  or  into  some  bank 
or  trust  company  paying  interest  all  rates  or  fares  collected  by  it 
in  excess  of  the  rates  or  fares  prescribed  in  the  Commission's 
order.  If  the  Commission  ultimately  wins,  all  excess  rates  and 
fares  so  collected  and  deposited  must  be  paid  back  by  the  public 
utility  to  the  persons  or  corporations  who  were  compelled  to  pay 
the  same.  It  is  hoped  that  the  procedure  thus  provided  will  tend 
to  prevent  the  long  drawn-out  court  proceedings  and  the  reliance 
on  technicalities  to  which  public  utilities  have  largely  resorted  in 
other  states  to  tie  the  hands  of  the  state,  actmg  through  its  railroad 
or  public  service  commission. 

The  Act  prescribes  adequate  penalties  for  its  violation  by  public 
utilities,  their  officers  and  employees  and  by  other  corporations  and 
persons. 

6.    Effect  of  Act  on  Powers  of  Incorporated  Cities 

AND  Towns. 

Although  the  language  of  the  Public  Utilities  Act  conferring 
powers  upon  the  Commission  is  very  general  in  its  terms,  the  Act, 
following  the  provisions  of  Section  23  of  Article  XII  of  the 
Constitution  of  the  state,  as  amended  on  October  10,  1911, 
specifically  provides  that  nothing  therein  contained  shall  affect  the 
powers  over  public  utilities  vested  in  any  city  and  county  or 
incorporated  city  or  town  at  the  time  the  Act  should  go  into  effect, 
which  was  March  23,  1912.  The  result  of  this  provision  is  that 
the  city  and  county  of  San  Francisco  and  the  incorporated  cities  and 
towns  of  the  state  retain  such  powers  of  control  as  were  vested 
in  them  on  that  day  until  they  vote  them  into  the  Commission  if  they 
so  desire.  The  most  important  of  these  powers  are  the  power  to 
fix  rates  and  fares,  a  power  which  most,  if  not  all,  of  our  incor- 
porated cities  and  towns  have  as  to  many  public  utilities,  and  Ac 
power  to  regulate  the  service,  equipment,  facilities  and  extensions 
of  public  utilities,  a  power  which  some  of  our  cities  have  secured 
by  their  freeholders*  charters  or  otherwise.  The  question  as  to 
what  powers  are  vested  in  the  Commission  and  what  powers  in  the 


24 


LOUIS  SLOSS  &  CO. 


municipality  must  be  answered  separately  as  to  each  municipality 
and  will  depend  on  the  constitutional,  statutory  and  charter  provisions 
applicable  to  each  such  municipality. 

Section  23  of  Article  XII  of  the  G)nstitution  of  this  state  also 
provides  that  the  legislature  shall  establish  the  election  machinery 
by  which  the  incorporated  cities  and  towns  of  the  state  may.  if 
they  so  desire,  confer  their  powers  as  to  any  or  all  classes  of  public 
utilities  upon  the  Commission.  The  extraordinary  session  of  the 
legislature  accordingly  passed  a  companion  act  to  the  Public 
Utilities  Act,  referred  to  as  the  Hewitt  Election  Act,  introduced 
in  the  Senate  by  the  Hon.  Leslie  R.  Hewitt,  passed  by  the 
legislature,  approved  by  Governor  Johnson  on  January  2,  1912, 
and  effective  on  March  23,  1912.  The  Hewitt  Act  provides 
that  an  election  for  this  purpose  may  be  called  in  any  city  and 
county,  or  incorporated  city  or  town,  by  the  legislative  body  thereof 
either  on  its  own  initiative  by  a  three-fifths  vote  of  its  members 
or  in  pursuance  of  a  petition  signed  by  10  per  cent  of  the  qualified 
electors  and  filed  with  the  clerk  of  the  legislative  body.  A  majority 
of  the  votes  cast  on  any  proposition  submitted  at  the  election  is 
sufficient  to  confer  upon  the  Commission  [>ower  over  the  public  utility 
affected  by  that  proposition.  If  the  city  or  town  has  voted  its 
powers  as  to  any  class  of  public  utilities  into  the  Railroad  Com- 
mission, it  may  thereafter  by  a  similar  vote  reinvest  itself  with  such 
power. 

Tlie  Commission  has  no  power  over  municipally  owned  plants. 
The  same  Section  23  of  Article  XII  of  the  Constitution,  under 
which  the  legislature  acted  in  passing  the  Public  Utilities  Act,  in 
defining  the  corporations  and  persons  to  be  affected,  uses  the  words 
"every  private  corporation,**  thereby  excluding  by  inference  a 
municipal  or  other  public  corporation. 


7.    Organization  of  Commission  for  Its  Work. 

In  order  to  be  able  to  handle  the  great  amount  of  business  which 
it  will  be  called  upon  to  perform  under  the  Public  Utilities  Act, 
the  Commission  has  organized  its  work  thoroughly  and  systematically. 
It  has  provided  the  following  six  departments:  (1)  office;  (2) 
legal;  (3)  rate;  (4)  engineering;  (5)  statistics  and  accounts; 
and   (6)   service.     The  office  department  consists  of  the  secretary 


THE  PUBLIC  UTILITIES  ACT. 


25 


and  his  staff  and  will  perform  the  administrative  work  of  the 
Commission.  The  legal  department  will  represent  the  Commission 
in  court,  advise  the  Commission  and  each  commissioner  on  all 
questions  of  law,  supervise  all  formal  proceedings  before  the 
Commission  and  have  particular  responsibility  as  to  appHcations  for 
permission  to  issue  stocks,  bonds  or  other  securities.  The  rate 
department  will  handle  all  matters  affecting  the  rates  of  all  public 
utilities.  The  engineering  department  will  perform  the  Commission's 
engineering  work  as  to  all  public  utilities  and  its  service  work  as 
to  railroad  and  other  transportation  companies  and  water  corpora- 
tions. The  department  of  statistics  and  accounts  will  work  out  a 
system  of  accounting  for  each  class  of  public  utilities,  wherever 
feasible,  will  edit  the  annual  and  other  reports  of  public  utilities  to 
the  Commission,  and  will  furnish  the  necessary  information  from 
the  records  of  the  public  utilities  in  cases  of  rate  fixing,  approvals 
of  stock  and  bond  issues  and  kindred  matters.  The  service 
department  will  have  supervision  over  the  quantity,  quality  and 
safety  of  the  service  rendered  to  the  public  by  gas,  electrical, 
telephone  and  telegraph  corporations  and  wharfingers  and  ware- 
housemen. Each  department  will  have  its  work  properly  subdivided 
so  as  to  secure  as  far  as  possible  men  peculiarly  fitted  to  handle 
each  kind  of  work  which  the  Commission  will  be  called  upon  to 
perform,  to  the  end  that  the  Commission's  business  may  be  disposed 
of  promptly  and  efficiently. 

The  problem  of  placing  the  relation  between  the  public  utilities 
and  the  people  on  a  basis  which  shall  be  fair  and  reasonable  and 
just  is  the  greatest  problem  which  faces  this  state  to-day.  It  is  an 
economic  problem  and  affects  directly  the  comfort  and  prosperity 
and  happiness  of  every  man,  woman  and  child  in  this  state.  The 
framers  of  the  Public  Utilities  Act  hope  and  believe  that  the 
administration  of  that  Act  will  prove  of  tremendous  benefit  to  the 
people  of  this  state,  while  at  the  same  time  winning  for  the  public 
utilities  a  measure  of  confidence  on  the  part  of  the  traveling  and 
consuming  and  investing  public  which  they  otherwise  could  not 
possibly  have  won.  Tlie  writer  trusts  that  the  administration  of 
this  Act  will  conduce  materially  to  the  end  desired  by  all  good 
citizens — ^the  happiness  and  prosperity  of  this  great  state  and  of 
all  her  people. 


! 


Valuation  of  Public  Utilities. 

By  Henry  A.  Lardner. 

Manager  of  San  Francisco  Office,  J.  G.  White  &  Co.,  Inc. 


The  unmistakable  trend  of  the  times  is  toward  the  regulation 
and  control  of  all  public  service  or  utility  corporations  by  the 
creation  of  State  Conmiissions  endowed  with  broad  powers,  and  the 
broadening  for  that  purpose  of  the  powers  of  those  older  commis- 
sions created  primarily  for  the  regulation  of  common  carriers. 

As  the  regulation  of  a  public  utility  usually  begins  with  an 
investigation  of  the  cost  and  the  fairness  of  its  charges  for  service, 
and  as  these  have  or  should  have  a  definite  relation  to  the  value 
of  the  investment  or  physical  property,  it  follows  that  before  the 
equity,  or  otherwise,  of  rates  can  be  established,  it  becomes  necessary 
to  determine  beyond  question  the  fair  value  of  the  property  or  plant 
of  the  con*pany  under  investigation. 

This,  together  with  the  limitation  by  the  Commissions,  both  as 
regards  the  class  and  amount  of  securities  which  a  public  service 
corporation  may  issue,  and  the  increasing  demand  of  financial 
institutions  for  more  detailed  information  regarding  the  corporations 
in  which  they  are  interested,  has  resulted  in  the  development  of 
an  entirely  new  branch  of  engineering,  viz.,  the  detailed  valuation 
of  corporate  assets. 

Before  the  institution  of  public  utility  commissions,  die  necessity 
of  knowing  in  detail  a  corporation's  actual  assets  and  their  value 
was  not  realized  to  anything  like  the  present  extent,  and  without 
this  incentive  it  is  safe  to  say  that  a  large  majority  of  corporations 
neglected  to  obtain  this  valuable  information.  Since  this  data  may 
now  be  called  for  by  the  Commissions,  the  public  utility  corporations 
have  awakened  to  a  need  of  these  valuations,  which  they  at  first 
were  disposed  to  look  upon  as  a  burdensome  and  unnecessary 
expense,  but  which  on  the  contrary  they  are  actually  finding  of  the 
greatest  value  to  themselves  in  making  a  comprehensive  analysis  of 
their  own  affairs. 


28 


LOUIS  SLOSS  &  CO. 


VALUATION  OF  PUBLIC  UTILITIES. 


29 


, 


The  making  of  a  competent  physical  valuation  is  a  very  consid- 
erable undertaking,  and  to  arrive  at  the  full  and  ultimate  value  of 
the  property,  it  must  be  made  in  great  detail.  To  do  this  and  to  have 
the  work  accomplished  with  expediency  and  economy,  a  valuation  or- 
ganization must  include  the  necessary  executive  and  engineering  experi- 
ence to  properly  direct  the  field  and  office  statf. 

As  in  construction  engineering,  so  also,  in  appraisal  engineering 
are  the  best  results  only  obtained  by  such  engineers  having  in  their 
employ  specialists  in  each  branch  of  the  many  which  go  to  make 
up  the  large  public  service  corporations  of  to-day.  as  an  appraisal  such 
at  is  now  demanded  by  many  of  the  financial  institutions  and  the 
Commissions  in  order  to  meet  all  requirements  and  justify  the  outlay 
involved,  necessitates,  not  only  an  intimate  and  thorough  knowledge 
of  the  construction  entering  into  the  properties  being  valued,  but  a 
thorough  and  intimate  knowledge  of  their  operation  and  management 
as  well.  Only  by  such  a  combination  can  full  justice  be  done,  and 
much  of  hidden  value  be  discovered  and  properly  tabulated. 

In  arriving  at  the  value  of  a  property  two  general  methods  may 
be  followed.  First,  in  the  event  of  the  Company's  records  and 
boob  having  been  carefully  kept,  these  should  give,  with  a  fair 
degree  of  accuracy,  what  has  been  expended  in  the  actual  con- 
struction, which  plus  certain  charges  which  most  companies  frequendy 
fail  to  take  into  account,  should  represent  the  original  cost. 

This  method,  when  applied  alone,  however,  is  open  to  objection, 
as  aside  from  the  fact  that  a  company's  books  seldom  contain  all 
the  information  required,  a  field  check  is  in  nearly  every  case 
necessary  in  order  to  verify  the  records  or  to  ascertain  what  changes, 
additions  or  deductions  have  been  made  since  the  date  of  original 
construction.  Furthermore,  the  fundamental  basis  recognized  by 
both  the  Courts  and  Public  Service  Commissions  on  which  the  value 
is  to  be  arrived  at  is  the  Cost  of  Reproduction;  that  is,  die  cost 
of  reproducing  the  property  as  it  actually  is  at  the  time  of  die 
appraisal.  Therefore,  while  the  cost  as  ascerUined  from  the  boob 
may  be  of  historic  interest  and  of  assistance  in  settling  many  of 
the  complex  questions  which  naturally  arise  in  work  of  this  char- 
acter,  it  is  by  no  means  conclusive. 


The  second  and  most  universally  accepted  method  is  to  determine 
the  value  by  an  actual  field  inventory  and  inspection  of  the  property. 

This  field  inventory  method  involves  ( 1 )  the  preparation  of  a 
complete  inventory  of  all  the  property  of  the  company;  (2)  a  study 
of  the  local  conditions  affecting  the  cost  of  all  work,  the  age  and 
condition  of  each  part  of  the  construction,  machinery  or  plant;  (3) 
the  determination  of  fair  unit  prices,  and  the  application  of  such 
prices  to  the  verified  inventory;  (4)  study  and  allowance  of  overhead 
charges. 

By  the  combination  of  the  detailed  inventory,  unit  prices,  and  the 
proper  overhead  charges,  the  value  of  the  physical  property  is  derived, 
and  if  desired,  these  results  may  be  tabulated  and  segregated  so  as  to 
indicate  the  location  of  the  company's  property  in  any  desired  geo- 
graphical or  physical  division,  and  its  use  for  the  generation,  the 
distribution,  or  other  functions  of  its  products. 

The  first  and  most  important  step  in  the  valuation  of  an  enter- 
prise is  the  inventory  and  valuation  of  the  physical  property. 

The  proper  direction  of  the  field  parties  is  of  great  importance, 
and  detailed  reports  covering  their  progress,  the  amount  of  work 
done,  and  conditions  as  found  should  be  forwarded  to  the  office  at 
the  end  of  each  day's  work;  also  such  requests  for  additional  data, 
maps  or  plans  as  may  be  required  not  only  for  the  work  upon  which 
they  are  immediately  occupied,  but  for  that  in  prospect  within  the 
immediate  future,  say  from  five  to  six  days. 

The  best  results  are  obtained  by  splitting  the  staff  into  different 
groups  or  divisions,  each  group  of  engineers  being  in  charge  of  a 
field  cheif ,  these  latter  being  under  the  direction  of  and  reporting  to  the 
manager  of  the  department  having  the  appraisal  work  in  charge. 

The  progress  of  the  parties  in  the  field  as  well  as,  of  course, 
the  office  staff,  must  be  carefully  followed  in  order  not  only  to 
have  the  work  done  properly,  but  that  there  may  be  no  duplication 
or  lost  motion,  and  that  the  client  may  receive  full  value  for  his 
expenditures. 

The  field  notes  which  should  show  as  far  as  may  be  necessary,  the 
actual  details  and  design,  form  a  complete  and  valuable  record,  which, 
aside  from  their  purpose  of  arriving  at  the  value  of  the  property,  often 
prove  of  great  future  value. 


30 


LOUIS  SLOSS  &  CO. 


I 


The  preparation  of  the  Cost  Data  and  Unit  Prices,  is  a  feature 
of  the  appraisal  which  demands  and  should  receive  the  most  careful 
consideration,  involving  as  it  does  the  cost  of  all  material  entering 
into  the  construction,  labor  prices,  from  day  labor  to  the  engineering 
and  executive  organization,  freight  rates,  hauling,  warehousing,  etc 
In  every  case  prices  should  be  prepared  to  cover  the  construction  at  the 
place  where  the  inventory  is  taken.  This  necessitates  the  applying 
of  the  unit  prices  covering  the  article,  and  if  any  distance  from  the 
market,  freight  or  team  allowance,  or  both,  as  the  case  may  be, 
plus  storage,  purchasing,  handling,  etc.,  together  with  such  elements 
as  may  enter  into  each  case. 

Prior  to  the  preparation  of  the  unit  prices,  however,  a  study  of  the 
situation  should  be  made  by  the  chiefs  of  departments,  they  checking 
all  field  notes,  and  making  a  careful  survey  of  the  various  factors  in- 
volved for  the  purpose  of  arriving  at  the  proper  charges  covering  the 
construction  of  such  work  as  may  have  been  done  under  other  than 
normal  conditions,  such  as  heavy  hauling  in  mountainous  or  difficult 
countries,  inaccessibility  to  railroads,  etc.,  and  proper  provision  made 
for  costs  to  the  company  of  work  which  could  not  be  avoided  at  the 
time  of  construction  without  denying  to  the  public  the  benefits  of  the 
service  until  such  time  when  the  construction  might  have  been  carried 
out  under  more  favorable  conditions. 

The  cost  arrived  at  should  not  necessarily  be  based  on  doing  all  the 
work  at  any  one  time,  but  due  consideration  should  be  given  to  the 
manner  in  which  the  work  was  actually  done,  and  if  it  extended 
over  a  term  of  years,  the  proper  allowance  made  therefor. 

In  view  of  the  many  stages  and  developments  through  which  the 
large  plants  have  passed  with  resultant  frequent  reconstruction,  every 
endeavor  should  be  made  to  obtain  as  intimate  and  correct  knowledge 
of  the  construction  and  development  of  the  business  as  is  possible 
to  secure,  as  only  in  this  way  can  full  justice  be  done  to  the  work 
for  which  the  engineers  have  been  employed. 

Records  should  be  investigated,  and  insofar  as  possible,  such 
data  as  may  be  secured,  either  verbally  or  by  means  of  such  records, 
used  in  making  such  deductions  as  may  be  necessary  in  order  to 
arrive  at  the  proper  conclusions.     These  investigations  will  not  only 


i'l 


VALUATION  OF  PUBLIC  UTILITIES. 


31 


serve  the  purpose  of  bringing  to  light  certain  facts  in  regard  to  the 
construction  of  the  plant  in  use  at  the  time  of  the  inventory,  but  will 
also  enable  the  engineer  to  understand  and  show  what  portions  of  the 
properties,  owing  to  the  advance  of  the  art,  or  other  causes,  are  not 
in  use  or  have  had  to  be  abandoned. 

In  every  valuation  it  is  necessary  to  bear  in  mind  and  to  consider 
that  improvements,  methods,  and  inventions  have  revolutionized 
untility  service,  often  necessitating,  at  great  expense,  the  substitution 
of  new  apparatus  before  the  old  had  run  its  useful  life. 

This  latter  is  brought  out  for  the  purpose  of  fixing  in  the  mind  of 
the  engineer  the  necessity  for  a  proper  allowance  for  depreciation 
covering  other  features  than  simple  wear  and  tear,  as  for  instance, 
obsolescence,  inadequacy,  etc.  Every  company  must  of  necessity 
protect  itself  against  all  these  ditferent  phases  of  depreciation. 

A  thorough  understanding  of  depreciation  and  its  proper  appli- 
cation to  the  various  elements  is  essential  as  otherwise  a  grave 
injustice  may  be  done  to  the  company  not  only  in  the  application 
of  depreciation  on  the  construction  work  done,  but  also  in  the 
provision  which  may  be  required  out  of  earnings  for  future 
depreciation.  This  in  itself  requires  careful  thought  and  study  of 
the  various  elements  entering  into  the  construction  of  a  public 
service  enterprise,  and  a  thorough  understanding  of  the  history,  use 
and  condition  of  the  various  component  parts  in  order  to  determine 
the  rates  of  depreciation  to  be  applied  and  provided  for,  as  well  as 
the  method  by  which  these  results  are  to  be  obtained. 

In  addition  to  the  value  of  the  property  as  obtained  by  a  careful 
mventory  of  its  different  component  parts,  there  are,  of  course, 
other  values  which  attach  thereto,  sometimes  called  intangible,  but 
which,  as  a  matter  of  fact,  are  quite  as  tangible  as  those  pertaining 
to  the  physical  property  and  which  must  be  carefully  considered 
and  included  m  the  valuation. 

In  arriving  at  the  cost  to  reproduce  an  operating  property  it  is 
necessary  to  divide  the  time  from  the  inception  of  the  project  to 
the  present  condition  of  the  busmess  into  three  distinct  periods,  as 
follows: — 


} 


32 


LOUIS  SLOSS  &  CO. 


VALUATION  OF  PUBLIC  UTILITIES. 


33 


Organization  Period,  or  the  period  from  the  inception  of  the 
project  to  the  time  when  the  necessary  financial  arrangements  are 
completed,  franchises  and  permits  secured  and  everything  in  readiness 
for  actual  construction.  This  period  involves  the  study  and  appli- 
cation of  such  allowances  as  may  be  proper  for  promotion  expenses, 
legal  services,  preliminary  engineering,  surveys,  reports,  incorporation 
expenses,  printing  and  engraving,  discounts  on  securities,  etc. 

Construction  Period:  This  period  covers  the  time  between  the 
end  of  the  promotion  or  organization  period  and  the  completion 
of  the  construction  and  final  tests  and  necessitates  a  close  study  on 
the  ground  of  all  plans,  methods  of  construction,  classes  and  quality 
of  materials  used,  methods  employed,  cost  of  various  materials, 
labor,  freight,  hauling,  engineering,  in  short,  the  cost  of  the  labor 
and  materials  necessary  to  reproduce  a  structure  after  the  plant 
are  made,  the  materials  purchased  and  the  organization  completed, 
and  includes  in  the  cost  of  the  material  the  actual  cost  delivered  to 
the  job  and  in  the  cost  of  the  labor  such  men  and  superintendence 
as  may  be  directly  chargeable  to  the  work. 

There  should  dien  be  added,  usually  in  the  form  of  a  percenUge* 
certain  other  expenses  generally  known  as  "overhead  charges**,  the 
amount  of  which  varies  with  the  nature  of  the  construction.     These 
"overhead   charges**   cover   such   disbursements  as   may   have   been 
made  for  Administration,  which  covers  salaries  and  office  expenses 
of  General  Office.  Purchasing.  Accounting.  Legal,  etc.     Interest  on 
money  used  in  the  construction  from  the  time  of  its  acquisition  to 
the  time  the  property  is  ready  for  operation,  less  any  interest  received 
on  money  deposited  during  the  construction  period.     Taxes,  such  at 
State.  County.  Municipal,  and  other  taxes  on  property  acquired  to 
the    actual    beginning   of    operation;    Liability    Insurance,    such    at 
employees*   hospital   and   medical   expenses,    adjustment   of   claims, 
final  adjustment,  etc..  or  where  this  is  covered  by  insurance,  such 
premiums  as  may  be  paid  to  Liability  Companies.        Engineering 
and    Engineering    Supervision,    such    as    salaries    and    expenses    of 
engineers   and   staff,   preparation   of   plans   and  specifications,   field 
engineering  records  and  progress  reports,  superintendents,  inspectors 
and  general  foremen,  tests,  trial  runs  and  outside  inspection,  etc. 


Contingencies,  which  covers  unforeseen  expense  due  to  delays, 
strikes,  floods,  quicksand,  uncertain  foundations,  loss  and  breakage, 
change  of  plans,  loss  by  fire.  etc.  Omissions  from  inventory,  due  to 
incomplete  records,  inability  to  inspect  on  account  of  construction 
being  submerged  or  buried,  as  well  as  property  entirely  overlooked. 
Tools  and  Plant,  which  covers  tools  lost,  worn  out  or  broken,  main- 
tenance and  repair  of  tools,  and  wear  and  tear  on  construction  plant, 
where  these  are  not  included  in  the  itemized  cost 

Business  Development  Period:  This  period  covers  the  cost  to 
the  company  of  developing  its  business  to  the  point  where  it  is  an 
earning  property  with  an  income  sufficient  to  cover  the  necessary 
interest  on  its  investment,  cost  of  operation,  taxes,  depreciation,  etc 
There  are  various  methods  of  arriving  at  the  cost  of  this  development 
period,  some  of  which  have  had  the  recognition  of  the  Courts  and 
Public  Service  Conmiissions. 

Considering  that  this  valuation  work  may  be  the  basis  for  sale, 
issuance  of  securities,  or  regulation  of  rates,  the  work  should  be 
done  in  such  a  manner,  both  on  the  detailed  inventory  and  the 
assembling  and  pricing  of  data,  as  to  comply  with  the  demands  of  the 
financial  interests  and  the  public  service  commissions,  and  to  inspire 
them  with  confidence  that  the  appraisal  has  been  thoroughly  and  fairly 
made,  and  that  the  methods  employed  and  the  values  derived  have 
been  proper  and  justifiable. 

It  is  also  necessary  and  of  importance  that  the  field  inventory,  pricing 
and  assembling  of  data  be  done  in  such  a  manner  that  each  step 
may,  if  necessary,  be  easily  verified,  as  it  is  frequently  the  case  that 
the  engineers  who  have  made  the  original  appraisal,  although  having 
the  subject  and  the  value  well  in  mind,  are  not  always  available 
when  some  question  arises,  necessitating  a  segregation  or  analysis  of 
certain  quantities  or  prices.  An  inventory  and  appraisal  in  order 
to  answer  the  purposes  for  which  it  is  intended  should  not  only 
show  the  values  of  the  component  parts  and  their  totals,  but  should 
be  made  in  such  a  way  that  the  items  making  up  these  totals  can 
be  easily  identified  and  checked. 

There  is  no  doubt  that  impartial  appraisals  of  properties  will  in 
future  be  looked  upon  as  of  as  much  importance  and  necessity  at 


34 


f 


LOUIS  SLOSS  &  CO. 


stock  taking,  or  an  audit  of  the  company's  books,  as  only  in  diis 
way  can  a  company  arrive  at  a  thorough  knowledge  of  its  condition. 

It  frequently  happens  that  appraisals  give  the  officials  of  a 
company  an  added  insight  into  its  affairs,  and  disclose  conditions 
not  before  dreamed  of,  and  often  prove  conclusively  that  the 
company  is  not  obtaining  a  proper  return  on  i>ortions  of  its 
investment 

It  is  the  experience  of  appraisal  engineers  that  corporations 
undertaking  physical  valuations  have  greatly  enlarged  their  ideas  at 
to  the  utility  of  these  statistics,  and  frequently  during  their  prepara- 
tion have  called  for  ramifications  in  form  with  many  possible  uses 
in  view,  far  beyond  the  original  ideas;  Furthermore,  the  field  notes, 
records,  drawings  and  tabulations  collected  by  the  appraisers  form 
the  basis  of  a  complete  and  detailed  record  of  the  company's  affairs 
from  a  physical  standpoint  and  are  of  inestimable  value.  This  is  par- 
ticularly true  when  the  proper  records  have  not  been  kept  during  the 
construction  or  operation  of  a  property,  or  where  such  records  have 
been  lost  or  destroyed. 

It  has  developed  that  with  an  organization  trained  m  the  making 
of  detailed  valuations,  the  cost  of  doing  the  work  is  remarkably 
low  in  view  of  the  great  value  which  has  been  found  to  attach  to 
die  data  collected  and  compiled. 

As  the  time  is  approaching  when  all  public  service  corporations 
will  of  necessity  be  valued  either  for  rate  making,  the  issuance  of 
securities,  or  both,  and  as  such  valuations  cannot  with  fairness  to 
the  companies,  and  to  carry  conviction,  be  hurriedly  or  superficially 
prepared,  it  would  seem  the  part  of  wisdom  to  anticipate  this 
requirement  A  valuation  once  properly  prepared  can,  at  relatively 
small  clerical  and  engineering  eiq^ense,  be  so  kept  up  to  date  as  to  at 
any  time  show  the  true  physical  assets  of  the  company  and  successfully 
pass  the  scrutiny  of  G>mmissions  and  the  Company's  financial  sponson. 


Leading  Railroad   and   Public   Service 

Commissions. 


By  Max  Thelen. 


Railroad  Commissioner  and  Attorney  for  the  Railroad   Commission 

of   the  State  of  California. 


Imestigaiion  of 
the  syf stems  of 
other 
Commissions. 


To  the  Honorable  the  Railroad  Commission  of  the  State  of  CaU- 
fomia. 

Gentlemen:  On  June  26,  1911,  your  Commission  adopted 
a  resolution  directing  me  to  visit  the  leading  railroad  and  public 
service  commissions  of  the  country  and  the  Interstate  Commerce 
Commission,  for  the  purpose  of  investigating  "the  powers  and 
workings  of  said  commissions,  the  steps  which  they  may  be  taking 
to  secure  the  physical  valuations  of  the  properties  of  the  public 
utilities  over  which  they  have  control,  and  proceedings  in  the  matter 
of  establishing  express  and  other  rates  and  office  organization,  and 
the  litigation  in  which  they  may  be  involved,  so  that  this  Com- 
mission may  be  better  able  to  advance  and  safeguard  its  similar 
work  within  the  State  of  California,**  and  to  present  to  your 
Commission  a  report  in  writing  of  the  results  of  my  investigation. 
Acting  under  these  mstructions,  I  left  San  Francisco  on  July  3. 
1911,  and  visited  the  railroad  or  public  service  commissions  of  Commissions 
Oregon,  Washington,  Nebraska.  Minnesota.  Wisconsin,  New  York,  visited. 
Massachusetts.  Maryland.  Georgia.  Texas  and  Oklahoma,  and  the 
Interstate  Commerce  Commission,  returning  to  my  duties  here  on 
August  22.  1911. 

I  talked  with  nearly  all  the  commissioners  and  department  heads 
for  the  purpose  of  ascertainmg  the  work  being  done  by  each 
commission  and  its  respective  departments.  I  also  bore  in  mind 
Ae  necessity  of  passing  a  statute  in  this  State  after  the  adoption 
of  the  constitutional   amendments   affecting  your   Commission,    and 


\i 


36 


LOUIS  SLOSS  &  CO. 


Legal   questions  made  inquiries  from  all  the  commissions  concerning  the  working  of 

particularly^  their  particular  statutes  and  the  amendments,   if  any,  which  have 

imestigaied.   recently  been  adopted,  or  which  the  respective  commissioners  might 

have  to  suggest.      I  present  herewith  my  report,  by  states,   in  the 

order  in  which  I  visited  them. 

Oregon. 
I. 

Introduction. 

The  Railroad  Commission  of  Oregon  was  created  by  Act  of 

February    18.    1907.      The  Commission  exercises  control   over   all 

railroad,    union   depot,    terminal,    car.   oil.    tank   line,    sleeping-car, 

freight,  freight  line  and  express  companies,  except  street  and  other 

railroad  companies  lying  entirely  within  the  limits  of  a  city.     The 

Jurisdiction  act  is  modeled  largely  on  the  Wisconsin  statute,  and  follows  it  as 

modeled  after  to  procedure  on  appeal   from   the  orders  of  the  Commission   and 

Wisconsm  control  of  rates,  service,  facilities  and  equipment. 

Ill 

Oregon  has  no  stock  and  bond  law  and  no  public  convenience 
and  necessity  or  indeterminate  permit  law.  A  proposed  public 
utilities  law,  passed  by  the  legislature  of  1911,  and  signed  by  the 
Governor,  was  held  up  by  a  referendum  and  will  not  be  voted  upon 
until   November,    1912. 

II. 

Organization  and  Office  System. 

The  Commission. — The  commissioners  are  Clyde   B.   Aitchison, 

Chairman,  a  lawyer;  Thomas  K.  Campbell,  a  lumberman;  Senator 

Frank  J.  Miller,  a  foundryman  and  labor  leader.     The  term  of 

Commissioners  of^ct  is  four  years  and  the  salary  $4,000.00  per  year.     Two  of 

elected,  ^^^  commissioners  arc  elected   from   the  two   congressional   districts 

of  the  state  and  the  third  at  large.     The  statute  provides  that  no 

commissioner   shall   pursue   any   other   business   or   vocation.      Mr. 

Devote  en/ire  Aitchison  tells  me  that  this  provision  is  observed.     The  statute  also 

time  to  D'o^'fr- provides  that  each  commissioner  "shall  devote  his  entire  time  to  the 


REPORT  OF  COMMISSIONER  THELEN. 


37 


dudes  of  his  office.**  Oswald  West,  the  present  Governor  of 
Oregon,  made  his  record  as  a  member  of  the  Railroad  Commission 
and  was  elected  while  such  commissioner.  Mr.  Aitchison  was 
formerly  clerk  of  the  Tax  Commission,  then  secretary  of  the  old 
Board  of  Railroad  Commissioners,  then  appomted  by  Governor 
Chamberlain  in  1907,  and  then  elected  by  the  people,  and  has  been 
chairman  of  the  board  since  January,  1911. 

Employees. — ^The  Commission  employs  a  secretary  at  a  salary  Employjee  s 
of  $2,000.00  per  year;  a  rate  expert  at  a  salary  of  $2,000.00  claries. 
per  year;  an  engineer  at  a  salary  of  $2,000.00  per  year;  an 
assistant  engineer  at  a  salary  of  $1,500.00  per  year,  and  a 
stenographer  at  a  salary  of  $1,200.00  per  year.  The  Commission 
also  at  times  calls  in  a  consulting  engineer,  particularly  for  inspection 
purposes.  The  consulting  engineer  is  paid  only  for  such  time  as 
he  devotes  to  the  work.  Mr.  Aitchison  showed  me  a  quarterly  bill 
for  such  engineer  amounting  to  $170.00. 

Office  Syfstem. — ^The  secretary  uses  a  decimal  filing  system.  This  Statistical  files. 
system  will  be  discussed  more  in  detail  in  connection  with  the 
Public  Service  Commission  of  the  Second  District  of  New  York. 
Rates  in  etfect  are  filed  in  cases  with  pockets,  both  numbered. 
Rates  which  have  been  superseded  are  pasted  into  scrapbooks  about 
four  inches  thick  with  leather  backs  and  then  stored.  Both  the 
elective  and  the  superseded  rates  are  indexed  by  a  card  system. 
In  the  case  of  commodities,  this  is  a  triple  index,  being  arranged 
as  to  (1)  issuing  railroad  with  its  filing  number.  (2)  Commission*! 
filing  number,    (3)    commodity. 

The  library  is  well  kept  up  and  contains  an  almost  complete  set 
of  state  railroad  commission  reports.  It  also  contains  a  large 
number  of  stockholders*  reports  of  the  different  railroad  companies. 
The  Conmiission  has  secured  practically  a  complete  set  of  these 
reports,  in  so  far  as  the  railroads  of  Oregon  are  concerned. 

III. 

Physical  Valuation. 

The  Commission  is  now  engaged  in  ascertaining  the  value  of 
the  railroad  properties  within  the  State.      No  findings  have  been 


38 


LOUIS  SLOSS  &  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


39 


ii 


(' 


M 


made  as  to  any  particular  railroad,  but  the  work  is  being  carried 

on  as  to  all  of  them.    A  formal  notice  was  prepared  and  addressed 

Method  of  to   each   railroad,   reciting   that  pursuant   to   the  provisions  of   the 

asceriaining  statute,    the    Commission    would,    on    a    day    certain,    proceed    to 

physical  valuation,  investigate  to  ascertain  the  matters  specified  in  the  statute;  that  the 

investigation  would  be  continued  from  time  to  time  and  from  place 
to  place  as  might  be  found  desirable;  and  that  the  railroads  would 
be  entitled  to  appear  and  be  heard  and  to  have  process  to  compel 
the  attendance  of  witnesses.  The  railroads  thereupon  appeared  and 
all  of  them,  with  the  exception  of  the  Southern  Pacific  Company, 
have  furnished  data  concerning  both  the  original  cost  of  construction 
and  the  present  cost  of  reproduction.  A  form  of  return,  practically 
identical  with  that  prescribed  by  the  Interstate  Commerce  Com- 
mission in  its  classification  of  expenditures  for  road  and  equipment, 
was  prepared  by  the  Commission  and  sent  to  each  of  the  railroads. 
The  information  requested  has  been  furnished  on  these  forms  by 
all  of  the  railroads,  except  the  Harriman  lines,  which  used  slightly 
ditferent  forms.  Upon  receipt  of  the  information  required,  a  hearing 
is  had.  A  large  portion  of  the  testimony  is  generally  devoted  to 
the  question  as  to  the  relative  sum  necessary  to  be  paid  by  the 
railroad  companies  for  right  of  way  in  excess  of  its  real  value. 
The  Oregon  Commission  seems  to  follow  in  this  respect  the 
Multiple   used,  Minnesota   Commission,   which   established   a  multiple   of   three   as 

to  country  land,  and  about  one  and  twenty-five  hundredths  as  to 
city  terminal  property.  The  results  of  these  investigations  will  be 
published  in  the  annual  report,  but  not  in  as  much  detail  as  the 
Washington  findings,  and  will  be  used,  but  only  in  conjunction  with 
other  elements,  in  fixing  rates. 
Work  of  I  examined  in  detail  the  work  now  being  done  by  Engineer 
Engineer,  W.  H.  Earl  of  the  Commission  along  these  lines.  Mr.  Earl  has 
examined  the  original  records,  such  as  profiles,  vouchers,  and 
contracts  to  be  found  in  the  railroad  offices,  and  in  this  way  hat 
secured  complete  data  concerning  the  original  cost  of  construction 
of  most  of  these  lines.  For  some  of  the  lines,  he  has  worked  out 
in  detail  the  cost  of  reproduction,  according  to  unit  prices.  He  has 
worked  out  carefully  a  series  of  unit  prices  for  the  ditferent  kinds 
of  material  used  in  railroad  construction.  His  results  were  secured 
by  ascertaining  the  price  actually  paid  in  a  large  number  of  cases. 


and  striking  an  average.  Chairman  Aitchison  of  die  Commission 
considers  the  work  which  the  Commission  has  done  in  this  matter 
to  be  of  very  considerable  merit.  Mr.  Earl  has  found  the  quantities 
as  submitted  by  Mr.  Pope  of  the  Harriman  lines  to  be  generally 
about  correct,  but  points  out  the  necessity  of  scrutinizing  with  the 
greatest  of  care  the  last  items  on  the  list  of  expenditures,  such  as 
freight  for  men  and  materials,  legal  expenses,  equipment,  interest 
and  commissions.  These  last  items  alone  raised  the  valuation 
submitted  for  one  of  the  Harriman  lines  from  about  $29,000,000 
to  about  $40,000,000. 

IV. 

Public  Utilities. 

As  already  stated,  the  act  of  the  legislature  of  1911,  making 
the  Railroad  Conunission  the  Public  Utilities  Commission  of  Oregon 
and  raising  the  salaries  of  the  -.ommissioners  from  $4,000.00  to 
$5,000.00  a  year,  has  been  held  up  by  a  referendum.  The 
opposition  came  from  citizens  of  Portland  who  had  prepared  an 
amendment  to  their  city  charter  providing  for  a  City  Public  Service 
Commission.  After  the  referendum  had  been  invoked,  the  Portland 
measure  was  defeated  at  a  city  election.  The  result  is  that  one 
measure  for  control  has  been  defeated  and  the  other  is  held  up. 

Chairman  Aitchison  condemns  strongly  the  provisions  of  Senate    Commissioner 
Constitutional  Amendment  No.  47  to  be  voted  on  in  this  state  on    condemns 
October    10,    1911,   providing   that   incorporated  cities  and   towns    k/^^aj 
may  retain  the  powers  which  they  now  have  with  respect  to  public 
utilities.     He  is  strongly  of  the  opinion  that  all  the  powers  with 
reference  to  public  utilities  ought  to  rest  in  the  state  board. 

V. 

Rate  MAKiNa 

Chairman  Aitchison  is  of  the  opinion  that  the  cost  of  reproduction   Discussion  of 
basis  for  rate  fixing  purposes  is  fraught  with  very  serious  dangers,    "^e'f'o^/s  used  as 
He    feels   that    rates    fixed    on    that    basis    are    likely    to    become    —^Lf-,^ 
inordinately  high,  particularly  if  in  ascertaining  the  cost  of  repro- 
duction,  the   right  of  way   and  terminal   grounds  of  the  railway 


I'  I 


40 


LOUIS  SLOSS  &  CO. 


|i 


companies  are  valued  as  of  the  present  time.  He  thinks  that  it 
is  not  fair  to  the  public  to  establish  a  rate  on  the  value  of  real 
property  immensely  enhanced  by  the  growth  of  population  of 
adjacent  territory.  He  states  that  rates  based  on  7  per  cent  of 
the  cost  of  reproducing  the  Pennsylvania  railroad  system  to-day 
would  be  absolutely  prohibitive.  He  is  of  the  opinion  that  a  state 
commission,  in  fixing  rates,  must  consider  all  the  other  matters 
suggested  in  the  case  of  Sm}fth  vs.  Ames,  169  U.  S.  464,  such 
as  the  original  cost,  market  value  of  stocks  and  bonds,  density 
of  traffic,  density  of  population,  etc.  I  find  that  all  the  western 
commissions  are  very  much  exercised  over  the  cost  of  reproduction 
as  the  basis  for  fixing  rates,  particularly  when  the  cost  of  repro- 
duction includes  the  unearned  increment.  This  fear  has  been  very 
much  accentuated  by  the  decision  of  Judge  Sanborn  in  the 
Minnesota  rate  case,  in  which  case  the  value  of  the  railroads  as 
found  by  the  Master  was,  according  to  one  of  the  Wisconsin  com- 
missioners, at  least  50  per  cent  in  excess  of  the  value  as  shown  by 
the  evidence. 


\  n 


rate. 


VI. 

ElxpRESs  Rates. 

Wells,  Fargo  &  I  went  through  the  Commission*s  file  in  case  number  121,  being 
Co.  obejfs  an  investigation  instituted  February  13,  1910,  into  the  rates  of 
K^ommisston  s  Wells-Fargo  &  Company  on  property  taking  merchandise  and 
general  special  rates  or  multiples  thereof.  The  Commission  made 
its  order  July  12,  1910,  reducing  somewhat  the  rates  in  effect. 
On  rehearing,  the  Commission  modified  its  final  order  by  reducing 
somewhat  the  reductions  contemplated.  The  express  company 
thereupon  complied  with  the  order.  I  find  that  Oregon  and  Montana 
are  probably  the  only  states  in  which  Wells-Fargo  &  Company 
has  complied  with  orders  of  state  commissions  reducing  express 
rates.  In  Iowa,  Illinois,  Indiana,  Missouri  and  Oklahoma,  the 
express  companies  have  secured  injunctions  against  the  respective 
commissions.  In  the  last  two  states,  the  Commissions  have  been 
tied  up  in  this  way  for  over  two  years. 

I  read  the  transcript  of  the  testimony  in  the  Oregon  case  and 
looked  through  the  exhibits,  and  have  made  notes  thereon. 


M 


I-  i 


REPORT  OF  COMMISSIONER  THELEN. 


41 


VII. 

Litigation. 

On  July  3,  1911,  the  day  before  I  reached  Portland,  Judge 
Bean,  sitting  in  the  Federal  Circuit  Court,  sustained  the  demurrer 
of  the  defendant  railway  commissioners  in  the  case  of  Southern 
Pacific  Company^  vs.  Campbell,  in  which  case  the  complainant  had 
secured  an  injunction,  restraining  the  enforcement  of  an  order  of 
the  Commission  reducing  class  rates  in  the  Willamette  Valley. 
Judge  Bean  in  his  opinion  points  out  the  necessity  of  showing  the 
specific  facts  which  are  relied  upon  to  make  out  a  case  of  confisca- 
tion of  property.  On  the  question  of  interference  with  interstate 
commerce,  he  reaffirms  the  decision  in  the  case  of  Oregon  Railway 
and  Navigation  Company?  vs.  Campbell,  173  Fed.  957;  177  Fed. 
318;  180  Fed.  253.  In  this  latter  case.  Judge  Wolverton 
reached  a  decision  on  the  question  of  interference  with  interstate  Decision  at 
commerce  directly  at  variance  with  the  decision  of  Judge  Sanborn  "^ariance  rvith  that 
in  the  Minnesota  Rate  Case.  The  Oregon  case  and  the  Minnesota  '"  Minnesota  rate 
case  together  with  the  Arkansas  case  will  be  heard  before  the 
Supreme  Court  of  the  United  States  at  the  October  term. 

In  the  Portland  Railway,  Light  and  Power  Company  case  an 
appeal  has  been  taken  to  the  United  States  Supreme  Court  from 
an  order  of  the  Commission  reducing  suburban  fares  out  of  Portland. 
In  this  case  a  state  judge  granted  an  injunction  which  is  still  in 
effect.  The  railway  company  is  supposed  to  issue  to  each  passenger 
a  receipt  for  excess  fare  paid,  the  receipt  to  entitle  the  holder  to 
a  refund  in  case  the  order  of  the  commission  is  ultimately  sustained. 
Mr.  Aitchison  is  of  the  opinion  that  in  cases  in  which  the  Com- 
mission's order  as  to  rates  is  enjoined  by  the  corporations,  the  mere  * 
giving  of  a  bond  furnishes  but  little  relief. 


VIII. 

Grade  Crossings. 

The   Oregon   Commission   has  power   under   section   28   of   the  Commission 

statute  to  compel  the  installation  of  safety  devices  at  crossings  of  recommends 

railroad   and   highways  but  no  power   to   compel    a   separation   of  ^^^^^'^"^^^^  ^* 
grades.     The  commission  in  its  report  for  1910  points  to  the  great 


It 


42 


LOUIS  SLOSS  h  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


43 


1 


.« 


I 


expense  which  is  being  mcurrecl  by  most  of  the  eastern  states  in 
order  to  abolish  grade  crossings  and  recommends  a  statute  like  that 
of  Washington  prohibiting  the  future  construction  of  grade  crossings 
except  in  cases  where  upon  investigation  by  the  railroad  commission 
it  has  been  found  practicable  to  establish  such  a  grade  crossing. 
The  legislature  of  1911  failed  to  pass  such  a  law  for  the  reason 
that  the  people  of  the  West  do  not  seem  as  yet  to  realize  the 
very  great  importance  of  the  question  of  the  abolition  of  grading 
crossings.  Mr.  Aitchison,  however,  is  of  the  opinion  that  the  next 
legislature  will  pass  the  desired  statute. 

IX. 

Complaints  to  Interstate  Commerce  Commission. 

Commission       Section  47  of  the  Railroad  Commission  Act  makes  it  the  duty 

co-operates  with  of   the  Commission   to  investigate  interstate   freight   rates   affecting 

Interstate  Oy^gQ^  ^nd  to  request  of  the  railroads  such  changes  as  the  Com- 

C  '  ion  ^^^^^  ™^y  consider  necessary  and  thereafter,  if  the  changes  arc 
not  made,  to  apply  by  petition  to  the  Interstate  Commerce  Com- 
mission for  relief.  The  statute  also  provides  that  the  railroads  must 
file  with  the  Commission  all  freight  tariffs  relating  to  interstate 
traffic.  Mr.  Aitchison  considers  this  matter  of  complaint  before 
the  Interstate  Commerce  Conunission  on  the  part  of  the  state 
commission  to  be  of  considerable  importance.  His  Commission  it 
now  taking  up  with  the  Interstate  Commerce  Commission  the  matter 
of  Interstate  wool  rates,  affecting  shipments  from  eastern  Oregon. 
The  Conunission  does  not  take  up  with  the  Interstate  Conmierce 
Commission  matters  of  a  merely  individual  or  local  interest,  as  is 
done  by  the  Oklahoma  Commission,  but  confines  its  work  along 
these  lines  to  rates  affecting  a  considerable  traffic  within  the  state. 

X. 

Car  for  Track  Scale  Tests. 

Special   car       The  matter  of  the  correctness  of  track  scales  seems  to  be  of 

transported  free  considerable   importance   in   both   Oregon   and   Washington.      The 

h  railroads,  legislatures  of  both  states  in  1911   provided  for  the  joint  purchase 


by  the  two  railway  commissions  of  a  car  for  the  purpose  of  testing 
track  scales,  and  for  the  transportation  of  such  car  free  by  the 
railroads. 

XI. 
Long  and  Short  Haul  Clause. 

While  there  is  no  long  and  short  haul  clause  in  the  Constitution 
of  Oregon  or  in  the  Railroad  Commission  Act,  the  Supreme  Court 
of  Oregon  has  held  that  the  provisions  of  the  statute  against  undue  Discrimination 
discrimination   are   equivalent   to   such   a   clause.      The   legislature  prohibited  b\f 
of    1911    accordingly  granted  the  Commission  power  to  authorize  *'o'"^C' 
departures  from  this  prohibition. 

When  application  is  made  for  permission  to  deviate  from  die 
long  and  short  haul  clause,  the  Commission  notifies  the  municipal- 
ities and  commercial  bodies  along  the  line  of  the  railroad  in  the 
territory  affected.  In  only  one  case  has  the  Commission  granted  the 
desired  permission. 

XII. 

Co-operation. 


Chairman  Aitchison  suggests  that  it  would  be  well  to  form  a 
Pacific  Coast  Railway  Commissioners*  Association,  to  consist  of 
the  conmiissioners  of  Oregon,  Washington,  California,  and  Nevada, 
and  to  hold  frequent  conferences  concerning  matters  which  are  of 
interest  to  all  the  Commissions.  This  suggestion  is  particularly 
valuable,  in  view  of  the  fact  that  m  Washington  and  Nevada  the 
legislatures  of  1911  conferred  upon  the  state  railroad  commissions 
the  power  to  regulate  public  utilities,  while  in  Oregon  such  statute 
has  been  passed  and  will  go  into  effect  at  least  by  November  of 
next  year.  California,  in  entering  upon  her  problem  of  regulating 
public  utilities,  can  doubtlessly  secure  very  material  assistance  from 
these  other  states.  All  these  four  states  are  likewise  interested  in 
the  valuation  of  the  Harriman  lines,  and  should,  if  possible,  take 
concerted  action  in  this  matter. 


Pacific  Coast 

Railwa\f 

Commissioners 

Association 

suggested. 


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Washington- 


\ 


I. 

Introduction. 

The  Public  Service  Commission  of  Washington  was  created  by 
statute  of  191  I  to  take  the  place  of  the  former  railroad  commission, 
which  was  established  in  1905.  The  Railroad  Commission's  powers 
were  enlarged  so  that  the  present  Public  Service  Commission  has 
Jurisdiction,  jurisdiction  over  railroad,  street  railroad,  steamboat,  express,  car, 
sleeping  car.  freight,  freight  line.  gas.  electric,  telephone,  telegraph, 
water,  wharfinger,  and  warehouse  companies,  except  municipally 
owned  plants.  The  statute  is  carefully  worked  out.  containing  first  a 
general  introduction,  then  provisions  concerning  the  duties  of  each 
separate  class  or  utility  subject  to  the  control  of  the  Commis-' 
sion.  then  provisions  prescribing  the  powers  of  the  Public  Service 
Commission  as  to  all  these  companies,  then  provisions  concerning 
procedure  before  the  Commission  and  the  courts,  and  finally  provi- 
sions concerning  construction  and  repeal  and  a  saving  clause. 

11. 

Organization  and  Office  System. 

The  Commission. — ^The  commissioners  are  H.  A.  Fairchild, 
chairman,  a  lawyer  of  unusual  ability;  J.  C.  Lawrence;  and  Jesse 
Jones,  a  labor  leader.  The  term  of  office  is  six  years,  with  intervals 
of  two  years  between  expirations,  and  the  salary  of  the  commissioners 

Commissioners   is  $5,000.00  per  year.     The  commissioners  are  appointed  by  the 

appointed,    governor.     The  statute  contains  a  provision  to  the  effect  that  no 

commissioner  shall  engage  in  any  occupation  or  business  inconsistent 

Devo/e  7p/io/e  with  his  duties  as  commissioner.  The  commissioners  all  reside  i^ 
time  to  Ttfork.  Olympia.  the  state  capital,  and  the  Commission  is  in  session  prac- 
tically all  the  time.  To  my  mind,  one  of  the  principal  reasons  for 
the  undoubted  efficiency  of  this  Commission  is  the  fact  that  the 
members,  in  addition  to  being  well  qualified,  are  on  the  job  all  the 
time.  The  business  of  the  Commission  is  conducted  promptly  and 
efficiently.  While  I  was  in  Olympia.  several  matters  came  up 
concerning  new  rates  which  the  railroads  desired  to  put  into  effect. 


REPORT  OF  COMMISSIONER  THELEN. 


45 


The  chairman  of  the  Commission  promptly  telephoned  to  the  railroad 
authorities  in  Seattle,  found  out  exactly  what  was  wanted,  and 
settled  the  matter  then  and  there. 

Employees. — ^The  employees  of  tfie  Commission  arc  F.  M.  Salaries  of 
Lamed,  secretary,  at  a  salary  of  $3,000.00  per  year;  O.  O.  employees. 
Calderhead.  rate  expert,  at  a  salary  of  $3,000.00;  Harry  L. 
Gray,  engineer,  at  a  salary  of  $3,000.00;  an  inspector  of  safety 
appliances,  at  a  salary  of  $3,000.00;  a  telephone  expert,  at  a 
salary  of  $3,000.00;  an  accountant,  at  a  salary  of  $1,800.00;  and 
about  sixteen  other  employees,  of  whom  about  six  are  stenographers 
and  ten  employees  of  the  engineer. 

Office  System. — ^The  office  is  divided  into  different  departments.    Departments. 
the  secretary  being  at  the  head  of  the  administrative  department, 
the  engineer  at  the  head  of  the  engineering  department,  and  the  ralie 
expert  at  the  head  of  the  rate  department 

III. 

Physical  Valuation. 

By  far  the  most  important  work  which  has  been  performed  by 
the  Washington  Commission  has  been  the  valuation  of  the  railroads 
of  the  state.  Section  92  of  the  Act  of  1911,  being  an  amendment 
of  a  similar  provision  in  the  earlier  statute,  provides  that  it  shall  be 
the  duty  of  the  Commission  to  ascertain  the  numerous  items  specified 
in  the  statute  relating  to  the  value  of  the  railroads  of  the  state  and 
to  hold  a  hearing  thereafter  to  ascertain  these  matters,  upon  notice 
to  the  company,  and  then  to  make  its  findings,  with  the  right  of 
review  on  the  part  of  the  corporations.  I  read  the  entire  first 
volume  of  the  transcript  of  the  testimony  on  the  investigation  into  the  Methods  of 
value  of  the  Great  Northern  and  other  railroads.  The  proceedings  '^^^^^1^^^^^  ^^.^^^ 
were  conducted  like  court  proceedings.  Chairman  Fairchild  presided  ^^^y^J))JJ, 
and  ruled  on  the  admissibility  of  evidence.  The  Commission, 
through  the  Assistant  Attorney  General,  put  Engineer  Gillett  and 
the  other  employees  of  the  engineering  department  on  the  stand  and 
through  them  introduced  their  tabulations  concerning  the  cost  of 
construction  of  the  railroads,  land  values,  and  so  on.  Rate  Expert 
Calderhead  was  then  put  on  to  testify  as  to  rates,  movement  of 
traffic,  cost  of  operation  and  similar  matters.     After  the  railroads 


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LOUIS  SLOSS  &  CO. 


had  presented  their  case,  the  findings  were  prepared.  As  these 
findings  are  by  far  the  most  complete  of  their  kind  in  the  country, 
I  wish  to  refer  here  to  the  nature  of  the  findings  in  the  Northern 
Pacific  case.  The  G>mmission  there  made  findings  on  the  following 
facts: 


Facts  on  rphich 


1.     Financial  history  of  the  railroad  in  Washington,  with  dates 

Commission  ^£  construction  of  the  main  and  all  branch  lines,  and  the  financial 
to  th^sical  ^"^^^'y  °^  ^*  subsidiary  corporations. 
valuation,         2.     Original  cost  of  main  and  all  branch  linct. 

3.  Cost  of  improvements  and  betterments. 

4.  Amount    allowable    for    discount,    general    expenses    and 
interest  during  construction. 

5.  Amount  of  depreciation  of  the  various  structures  (Gfllett's 
tables). 

6.  Original  cost  and  cost  of  reproduction  of  all  equipment. 

7.  Cost  of  reproduction  of  all   rights  of  way  and  terminal 
grounds. 

8.  Property  owned  by  railroad,  but  not  used  for  operation. 

9.  Character  of  country  traversed. 

10.  Density  of  population  and  trafic. 

11.  Sources  from  which  capital  was  derived;  total  bonded 
mdebtedness;  market  value  of  stock  and  bonds  over  a  period  of 
several  years. 

12.  Total  tonnage  of  freight  carried  in  Washington  for  three 
years,  with  percentage  of  each  commodity,  divided  as  to  state  and 
interstate,  with  the  average  haul  of  each  and  the  average  haul  within 
the  state  of  the  interstate  haul. 

1 3.  Total  number  of  passengers  carried  in  Washington  for  three 
years,  with  passenger  miles;  average  distance,  state  and  interstate; 
and  revenue. 

14.  Elzpress.  mail,  and  other  transportation  revenues. 

15.  Operating  divisions. 


II 


REPORT  OF  COMMISSIONER  THELEN. 


4f 


16.  Number  of  employees  and  dieir  wages. 

17.  Total  present  cash  market  value  ($1 10,208,450). 

1 8.  Cost  of  operation,  divided  into  freight  and  passenger. 

19.  Average  cost  per  ton  for  moving  freight;  cost  per  ton  for 
moving  each  of  the  more  important  conunodities. 

20.  Freight  operating  expenses,  divided  into  state  and  interstate. 

21.  Passenger  operating  expenses,  divided  into  state  and  inter- 
state. 

22.  Method  of  apportioning  revenues;  total  for  state  and  inter- 
state for  three  years. 

23.  Taxes  for  three  years. 

24.  Gross  earnings  and  expenses  (probable)  for  year  ending 
June  30,  1909. 

25.  Rates  on  most  important  state  commodities. 

26.  Total  value  of  property  devoted  to  state  business  ($45.- 
226.464.50). 

These  findings  show  the  most  thorough  and  painstaking  work  on 
the  part  both  of  the  engineering  and  rate  departments  of  die 
commission.  Mr.  Calderhead.  the  rate  expert,  is  not  merely 
thoroughly  acquainted  with  rate  matters,  but  seems  also  to  be  an 
able  statistician  and  accountant  Most  state  commissions  of  the 
first  rank  have  separate  rate  and  statistical  departments. 


h 


IV. 

Engineering  Department. 

I  spent  several  hours  in  consultation  with  Engineer  Henry  L. 
Gray,  investigating  the  manner  in  which  the  work  of  his  department 
is  conducted.  In  order  to  ascertain  the  original  cost  of  construction 
of  the  railroad  properties  in  the  state  of  Washington,  the  employees  Investigations  of 
of  the  Commission  went  to  the  original  records  of  the  railway  original  records, 
companies  and  took  off  from  them  the  quantities  and  prices.  The 
engineering  department  never  takes  the  railroads*  figures.  The 
department  checks  over  the  data  furnished  by  the  railway  companies 


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REPORT  OF  COMMISSIONER  THELEN. 


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Engineers 
reports. 


Phyjsical 

valuation  of 

Telephone 

Companies. 


by  going  to  the  final  estimates  and  other  data,  both  in  the  office  of 
the  chief  engineer  and  of  the  auditor.  Men  are  also  sent  out  into 
the  field,  in  order  to  check  up  quantities  and  amounts.  The  estimates 
furnished  by  the  railway  companies  are  generally  fairly  correct  as 
to  quantities;  but  Mr.  Gray  has  found  it  very  necessary  to  scrutinize 
such  items  as  can  not  be  checked  over  from  the  books  of  the 
company,  such  as  engineering  expenses,  legal  expenses,  discount, 
interest  and  freight.  Mr.  Gray  prepares  his  reports  concerning  the 
ditferent  companies  in  very  readable  and  attractive  form.  These 
reports  generally  contain  information  concerning  the  organization  and 
financial  history  of  the  railroad,  its  physical  features,  its  general 
balance  sheet,  original  cost  of  construction  with  all  details,  the  cost 
of  reproduction  with  all  details,  and  the  amount  of  depreciation. 
The  work  is  done  in  a  scholarly  and  thorough  manner,  with 
considerable  attention  to  special  features  of  the  various  companies. 
•  Mr.  Gray  has  prepared  complete  reports  as  to  the  physical 
valuation  and  other  data  of  the  telephone  companies  of  Spokane  and 
Seattle.  The  Commission  will  soon  issue  orders  in  the  matter  of 
telephone  rates. 

As  already  stated,  the  work  of  valuing  the  railroad  properties 
has  been  completed.  The  engineering  department  goes  to  the  records 
of  the  railroad  companies  from  time  to  lime  in  order  to  keep  this 
valuation  up  to  date.  Within  a  few  years  a  new  estimate  as  to  the 
cost  of  reproduction  will  have  to  be  made,  for  the  reason  that  the 
price  of  labor  and  materials  is  constantly  increasing. 

Mr.  Gray  employs  some  eight  to  ten  men,  who  are  at  present 
largely  engaged  in  ascertaining  the  value  of  some  of  the  utilities, 
particularly  telephone  and  electric  light  companies. 

V. 

Court  Procedure. 

Review  of      Chairman  Fairchild  tells  me  that  in  his  judgment  the  two  most 

Commissions  important  provisions  of  the  Washington   statute   are   those   dealing 

orders  and  yf[(^  review  of  the  commission's  orders  and  review  of  their  findings 

findmgs.  ^^  ^^  valuations.     Section  86  of  the  statute  provides  for  a  review  of 

the  orders  and  the  findings  of  the  commission,  the  application  to  be 

made  to  the  superior  court  of  the  county  in  which  the  proceeding 


Valuations 

constantly 

revised. 


was  initiated.  The  pendency  of  any  review  shall  not  of  itself  stay 
or  suspend  the  operation  of  the  order  of  the  Conmiission.  but  the 
Superior  Court  may,  in  its  discretion,  restrain  or  suspend  the  operation 
of  the  order.  No  order  restraining  or  suspending  an  order  of  the 
commission  shall  be  made  except  upon  notice  to  the  commission  and 
after  hearing,  and  if  a  supersedeas  is  granted,  the  order  granting 
the  same  must  contain  a  specific  finding  based  upon  evidence  sub- 
mitted to  the  court  making  the  order  and  identified  by  reference 
thereto,  to  the  effect  that  great  or  irreparable  damage  would  other- 
wise result  to  the  petitioner  and  specifying  the  nature  of  the  damage. 
In  case  the  order  of  the  Conmiission  is  suspended,  the  company  must 
give  a  bond  for  the  payment  of  such  sums  as  may  ultimately  be 
found  to  have  been  paid  by  the  public  in  excess  of  the  rates 
specified  in  the  order  of  the  Commission.  An  appeal  thereafter  lies 
to  the  Supreme  Court.  The  Washington  statute  does  not  contain 
the  provisions  to  be  found  in  the  Oklahoma  Constitution,  to  the 
effect  that  the  appeaUng  company  must  keep  books  showing  the 
name  of  every  person  who  pays  a  rate  in  excess  of  that  specified  in 
the  commission's  order,  his  address,  and  the  amount  of  the  excess. 

Chairman  Fairchild  considers  the  Washington  plan  superior  to 
that  of  Wisconsin,  where  the  procedure  is  one  to  set  aside  the  order 
of  the  Commission.  If  new  evidence  is  introduced  in  court  in 
Wisconsin,  it  is  certified  by  the  court  to  the  Commission,  and  die 
Commission  must  then  pass  again  on  the  whole  matter  before  the 
court  renders  its  final  decision. 

Chairman  Fairchild  was  particularly  enthusiastic  over  the  pro- 
visions of  section  92  of  the  statute,  providing  for  a  court  review 
of  the  findings  of  the  commission  as  to  physical  valuation,  with  a 
provision  that  the  findings  of  the  Commission  as  tiled  or  corrected 
by  the  courts  shall  be  conclusive  evidence  in  any  other  proceedings 
of  the  facts  stated  in  the  findings  as  of  the  date  therein  specified. 
In  the  grain  case,  in  which  the  Washington  Commission  made  a  cut 
of  $750,000.00  annually  in  grain  rates,  the  Commission  introduced 
a  certified  copy  of  its  prior  findings  as  to  the  valuation  of  the 
railroads  affected,  and  thus  covered  that  part  of  its  case  in  a  minute 
or  two.  The  evidence  being  conclusive  on  that  point,  the  railroad 
companies  could  not  make  out  a  case  of  confiscation  of  property, 
and  consequently  did  not  appeal  from  the  decision  of  the  commission. 


Washington  plan 
compared   rvith 
Wisconsin  plan. 


Effect  of  making 
findings  of 
Commission 
conclusive 
evidence  in  Court 


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LOUIS  SLOSS  &  CO. 


y 


Mr.  Fairchild  points  out  that  the  Minnesota  Commission  expended 
over  $50,000.00  in  securing  the  valuation  of  iU  raUroad  properties 
(about  the  same  amount  as  Washington),  and  that  when  its  rate 
orders  were  attacked,  the  Commission  had  to  go  into  the  entire 
matter  again  before  the  Master,  with  the  result  that  the  railways 
were  enabled  to  introduce  a  mass  of  additional  evidence  which 
swamped  the  Master  and  resulted  in  an  excessively  high  valuation, 
besides  necessitating  a  very  large  amount  of  time  in  its  presentation. 

VI. 
Service  and  Facilities. 

Cnmrnission       The  Washington  statute  gives  to  the  Commission  adequate  powert 
pmTZ  over  matters  such   as  service,  equipment   and   facilities  over  which 
comfort  of  the   California   Commission   does   not   at  present  have   jurisdicUon. 
public,  j^^  Washington  Commission  has  inspected  each  of  the  two  hundred 
railway  stations  in  the  state  and  has  made  a  large  number  of  orders 
requiring  additions  or  betterments  in  station  buildings  and  improve- 
ments in  facilities.     Appeals  were  taken  in  some  twenty-five  of  these 
cases.  The  Supreme  Court  of  Washington  has  generally  sustained  the 
Commissions   orders.      The   Commission   employs    an   inspector   of 
safety  appliances  and  also  an  inspector  of  scales  for  weighmg  hay 
and  grain.     Mr.  Gray,  the  engineer  in  charge  of  physical  valuation, 
is  also  doing  considerable  work  in  the  matter  of  inspectmg  facilitiet 
and  equipment. 

VII. 

Public  Utilities. 

When  I  visited  the  Commission  m  July  of  this  year,  the  Com- 
mission was  just  entering  upon  its  duties  with  regard  to  the 
Nei.  work  of  regulation  and  control  of  public  utilities.  The  sUtute  confernng 
Commission,  these  powers  upon  the  Commission  was  approved  in  March  of  this 
year.  The  Commission  had  not  at  that  time  marked  out  its  work 
in  this  connection,  but  was  beginning  to  receive  complaints  conccrmng 
telephone  rates  and  water  rates.  The  Commission  was  also  havmg 
some  litUe  difficulty  with  reference  to  steamship  companies,  particu- 
larly as  to  whether  or  not  it  would  be  necessary  for  them  to  file 
taritfs  with  the  Commission. 


REPORT  OF  COMMISSIONER  THELEN. 


51 


VIII. 
Rate  FixiNa 

The  Washington  Commission,  although  it  has  done  pre-eminently  Elements 
able  work  in  the  matter  of  ascertaining  the  physical  valuation  of  considered  in  rate 
railroad  properties,  has.  nevertheless,  been  careful,  in  fixing  rates,  to  "^^king- 
consider  all  the  elements  specified  in  the  case  of  Smyfth  vs.  Ames^ 
including   original    cost,    present   cost   of    reproduction,    density    of 
traffic,  density  of  population,  and  the  market  value  of  stocks  and 
bonds.     Chairman  Fairchild  points  out  that  neither  the  original  cost 
of  construction  nor  the  present  cost  of  reproduction  are  necessarily  Discussion  of  their 
the   proper   basis    for   rate   fixing   purposes.      He   referred   to   two  relations. 
railroads,  one  of  them  in  a  densely  populated  valley  and  the  other 
in  a  sparsely  setded   limber  country.      It  might  well   be   that   the 
original    cost    of    construction,     and    even     the    present    cost    of 
reproduction,  are  the  same,  or  nearly  the  same,  in  these  two  cases; 
nevertheless,    it  would   be   absurd   to   say   that   these   two  railroad 
properties  have  the  same  value,  either  for  rate  fixing  or  for  any  other 
purpose.     Chairman  Fairchild  considers  the  Puget  Sound  Electric 
Railway  case  to  represent  the  most  advanced  work  of  the  Commis- 
sion.     It  is  the  first  case  in  which   the   Commission   shows  m   its 
findings  percentage  depreciation   and   the  cost  of  reproduction  less 
depreciation  so  as  to  ascertain  present  value.     The  Commission  in 
this  case  followed  Engineer  Gillett*s  method  of  ascertaining  average 
life  of  ditferent  kinds  of  equipment,  salvage  value,  and  percentage 
depreciation  to  be  charged  off  each  year.     The  order  of  the  Com- 
mission in  this  case  was  sustained  by  the  Superior  Court  on  November 
14,    1910,  but  the  case  has  been  appealed  to  the  State  Supreme 
Court. 

IX. 

Results  Attained  by  the  Commission. 

In  addition  to  the  Commission's  work  in  connection  with  the 
valuation  of  its  railroads,  it  has.  among  other  things,  accomplished 
the  following  work: 


52 


LOUIS  SLOSS  &  CO. 


Washington 

Commission  has 

established: 

joint  rates. 

reduced  express 
rates. 


general  distance 
tariff. 

joint  rates  on 
T^heat. 


connecting   tracks^ 


1.  It  has  established  joint  rales  on  commodities  from  eastern 
Oregon  to  Portland,  lower  than  the  sum  of  the  locals,  thus  effecting 
a  reduction  in  rates  amounting  to  about  $100,000  annuaUy. 

2.  It  has  reduced  express  rates  on  fruit  and  vegetables  about 
20  per  cent,  but  has  made  no  general  investigation  into  express 
rates.  Commissioner  Jones  told  me  that  the  Commission  felt  that 
it  would  be  very  necessary  to  make  such  investigation  shortly. 

3.  It  has  prescribed  a  general  distance  tariff,  thereby  making 
a  reduction  of  about  $75,000.00  in  rates  annually. 

4.  It  has  established  a  joint  rate  on  wheat  from  Oregon 
Railway  and  Navigation  Company  points  in  eastern  Oregon  to 
Puget  Sound  points,  but  the  Commission  s  order  m  this  case  has 
been  enjoined  in  the  federal  courts. 

5.  It  has  ordered  the  installation  of  connecting  tracks  wherever 
one  railroad  intersects  or  terminates  at  or  near  another.  The  railway 
companies  have  appealed  thU  case  from  the  State  Supreme  Court 
to  the  United  States  Supreme  Court 


better  stations. 


twelve  per  cent 

reduction  on 

grain  rates. 

reduced  passenger 
rates. 

less  grade 
crossings. 


imestigation  of 

telephone 

properties. 


6.  It  has  inspected  every  raUroad  station  in  the  sUte.  as  already 
pointed  out.  and  has  made  some  200  orders  requiring  additional 
station  facilities. 

7.  It  has  made  a  reduction  of  12  per  cent  on  grain  rates  of 
the  Northern  Pacific,  thereby  effecting  a  reduction  in  rates  of 
$750,000  annually. 

8.  It  has  reduced  passenger  rates  on  tfie  Puget  Sound  Electric 
Railway.     This  case  has  been  appealed. 

9.  It  has  denied  the  right  to  install  grade  crossings  in  some 
100  cases. 

10.  It  has  requested  that  tfie  legislature  give  to  it  the  power 
to  abolish  existing  grade  crossings. 

11.  It  has  engaged  a  telephone  expert  and  has  made  a  careful 
investigation  into  the  value  of  the  telephone  properties  withm  the 
state,  and  is  now  seeking  to  ascertab  whether  it  can  order  m  a 
measured  rate  as  against  the  present  flat  rate. 


REPORT  OF  COMMISSIONER  THELEN. 


53 


Nebraska 


Introduction. 

The  State  Railway  Commission  of  Nebraska  was  created  by 
amendment  to  the  Constitution  adopted  on  November  6.  1906. 
The  legislature  of  1907  thereafter  adopted  a  comprehensive  railway 
commission  act  The  Commission  succeeded  a  board  of  transpor- 
tation which  did  little  or  nothing.  The  statute  of  1 907  was  amended 
in  1911  with  reference  to  the  method  of  review  of  the  decision  of 
the  commission.  Appeals  must  now  be  taken  directly  to  the  state  ^PP^ls* 
supreme  court  and  the  evidence  presented  before  the  Commission 
can  alone  be  considered. 

The  Nebraska  Commission  has  power  to  fix  the  rates  and  to  Powers. 
regulate  the  service  of  railroads,  express,  car,  sleeping  car.  freigjit, 
freight  line,  telephone  and  telegraph  companies.  The  Commission 
has  jurisdiction  over  all  railways,  including  steam,  interurban,  and 
street  TTie  legislature  of  1911  placed  irrigation  companies  under 
the  cmitrol  of  the  Commission. 

The  matter  of  bringing  all  public  utilities,  such  as  gat,  light,  heat.  Public  Utilities 
power  and  water  companies,  under  the  control  of  the  Commission,  "°'  controlled. 
has  been  discussed  during  the  last  two  sessions  of  the  legislature 
but  no  action  has  been  taken.      Under  the  stock  and  bond  law, 
however,  the  Commission  regulates  the  issues  of  stocks  and  bonds  ^tock  and  Bond 
of  all  public  service  corporations,  including  gas,  light,  heat,  power,  ^*5"««- 
and  water  companies. 

n. 

Organization  and  Office  System. 

The  Commission. — The  commissioners  are  Dr.  H.  J.  Winnett, 
a  retired  physician,  chairman;  Heniy  T.  Clarke,  Jr.,  an  attorney;  Commissioners 
and  W.  J.  Furse.  also  an  attorney.     The  commissioners  are  selected  elected. 
for  six  year  terms  with  intervals  of  two  years.      They  receive  a 
salary  of  $3,000.00  per  annum  and  devote  their  entire  time  to  the 
duties  of  their  office. 


)l  i 


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54 


LOUIS  SLOSS  &  CO. 


A  regular  meeting  is  held  every  week  and  special  meetings  at 
other  times  during  the  week.  Chairman  Wimiett  disapproves  strongly 
of  the  election  of  commissioners.  n\    \,  r> 

Salaries  of  Empfojjees.— The  employees  of  the  Commission  arc  Clark  t^er- 
emplovees.  ^,^  ^cretary.  at  a  salary  of  $2,400.00;  U.  G.  Powell  rate  expert 
at  a  salary  of  $2,400.00;  L.  E.  Wettling.  an  accountant;  L.  C. 
Hurd.  engineer  in  charge  of  physical  valuation;  a  reporter;  about 
four  employees  of  the  rate  expert;  three  stenographers  m  the 
Kcretary's  office;  and  some  eleven  persons  employed  by  the  cngmeer 
in  making  physical  valuations.  , .      ic 

OiScc  Si,sfcm.-Secretary  Clark  Perkins  showed  mc  his  office 
for  detail.     His  largest  correspondence  is  in  comiection  with  informal 
Statistical  complainU.      These   are   filed   in   card   board   folders   which   have 
Department,  endorsed  thereon  the  necessary  data  to  show  the  nature  and  disposition 
of   the   case,    and  may   be   reached   through   a   triple   card   index^ 
One  index  refers  to  the  complainant's  name;  another  to  the  name  ot 
the  city;  and  the  third  to  the  defendant's  name.     The  »ame  index 
covers  formal  complaints  as  well.     Formal  cases  are  filed  m  flexible 
card  board  envelopes  and  the  exhibits  are  filed  in  boxes  m  the  vault. 
Applications  for  approval  of  changes  in  rates,  stock  and  bond  i«ues 
and  other  matters  are  all  filed  together  in  envelopes  smiilar  to  those 
used  for  informal  complaints  and  are  indexed  separately.     The  next 
largest  class  of  correspondence  is  with  the  telephone  companies,  ot 
which  there  are  over  six  hundred  in  Nebraska.     Mr.   Perkins  has 
a  separate  file  for  each  of  these  companies.    All  other  conespondcnce 
is  treated  as  miscellaneous  and  is  filed  alphabetically,  except  corre- 
spondence with  other  commissions,  which  is  separately  filed.      Mr. 
Perkins  has  in  his  desk  two  books,  one  for  informal  complamU  and 
Ae  other  for  applications.     As  each  complaint  and  application  comes 
in.  a  number  is  assigned  to  it  in  these  books. 

After  the  board  meetings,  the  secretary  himself  dictates  the  entire 
minutes.  He  then  pastes  them  into  a  book  from  which  they  arc 
later  copied  into  the  regular  minute  book,  after  having  been  corrected 
and  approved.     The  original  minute  memorandum  book  u  preserved. 


REPORT  OF  COMMISSIONER  THELEN. 


55 


III. 
Stock  and  Bond  Law. 

House  Bill  No.  578,  Laws  of  1909,  gives  the  Commission 
authority  to  pass  on  all  proposed  stock,  bond  and  note 
issues  of  all  public  service  corporations  incorporated  or 
hereafter  incorporated  under  or  by  virtue  of  the  laws  of 
Nebraska,  said  bonds,  stocks  and  notes  to  be  issued  only 
for  the  "acquisition  of  property,  the  construction,  comple- 
tion, extension  or  improvement  of  facilities,  the  improve- 
ment or  maintenance  of  service,  or  the  discharge  or 
refunding  of  obligations." 

While  the  language  of  the  statute  is  limited  to  Nebraska 
corporations,  all  public  service  corporations  doing  business 
in  the  state  submit  their  proposed  stock  and  bond  issues 
for  the  Commission's  approval,  so  as  to  remove  clouds  on 
the  issue  and  give  additional  stability  thereto.  The  Mis- 
souri Pacific  Railway  Company,  for  instance,  recently 
secured  the  Commission's  approval  of  a  twenty  million 
dollar  bond  issue. 

Applications  for  approval  are  made  on  blanks  furnished 
by  the  Commission,  showing  in  detail  assets,  liabilities  and 
purposes  of  issue.  The  largest  number  of  these  applica- 
tions have  come  in  from  telephone  companies..  The 
Commission  usually  approves  the  applications  as  a  matter 
of  form  and  enters  an  order  approving  the  issue,  specifying 
the  purposes  for  which  the  proceeds  may  be  used  and 
directing  that  the  corporation  render  to  it  on  blanks  fur- 
nished by  the  Commission  an  account  of  all  moneys 
received  from  the  sale  of  the  stocks  and  bonds  and  of  the 
purposes  for  which  the  money  was  actually  expended.  I 
consider  the  control  of  stocks  and  bonds  and  other  secur- 
ities to  be  one  of  the  absolutely  essential  duties  of  a 
railroad  or  public  service  commission,  and  shall  discuss 
the  matter  in  greater  detail  in  connection  with  the  work  of 
the  Wisconsin,  New  York,  and  Texas  Commissions. 


Commission  passes 
on  proposed 
security^  issues. 


foreign 
corporations 
submit  security 
issues  for 
approval. 


Applicatiorts, 


1 1 


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56 


LOUIS  SLOSS  &  CO. 


IV. 

Telephone  Companies. 

Information      The  Commission  has  prescribed  a  set  of  fonns  to  be  filled  out 

required  of  ^y  telephone  companies,  showing  exchange  rates,  toll  rates  and  added 

telephone  ^^^^  ^^  connecting  exchanges,   and  has  also  prescribed  a  system 

companies.  ^^  ^^^^^^^  ^f„ence  to  which  will  be  found  in  the  published 

reports.     A  large  number  of  so-called  farmers*  telephone  companies 

exist  in  die  state. 

V. 

Electric  Street  Railways. 

Street  railwavs  The  Commission  has  control  over  these  railways  and  has  had 
ghe  trouble,  more  trouble  with  them  than  with  any  otfier  kind  of  corporation. 
The  cities  of  Omaha  and  Lincoln  are  the  only  cities  in  Nebraska 
having  such  companies.  The  case  of  Cify  of  Hopelock  vs.  The 
Uncoln  Traction  Compan}f,  1910  Nebraska  RaUway  Conmussion 
Reports,  page  98.  took  up  a  very  considerable  amount  of  the 
Commission's  time. 

VI. 

Rate  Litigation. 

The  rate       The  legislature  of    1907.   at  tfie  time  of   enacting  the  present 

legislature  results  Railroad  Commission  law.  also  passed  statutes  ( 1 )  reducing  express 

j."}""?^^  rates  25  per  cent;   (2)   establishing  a  maximum  2  cent  passenger 

Ithgation.  ^^^    ^^  ^3^  cstablUhing  commodity  freight  rates.     Each  of  these 

statutes   was   attacked   in   the   courts.      The   Railway   Commission 

secured  from  the  State  Supreme  Court  a  decision  upholding  the  cut 

in  express  rates.     The  United  States  Express  Company  has  recently 

appealed  the  case  to  the  United  States  Supreme  Court. 

The  passenger  and  commodity  freight  rate  cases  were  removed  by 
the  railroad  companies  from  the  state  to  the  federal  courts,  which 
courts  issued  restraining  orders  under  which  the  railways  have 
continued  to  charge  their  former  rates.  These  cases  are  good 
illustrations  of  the  length  of  time  appeals  from  orders  of  railway 
commissions  may  remain  in  the  courts.     They  were  brought  in  1907 


REPORT  OF  COMMISSIONER  THELEN. 


57 


and  have  not  yet  been  tried.     Rate  Expert  Powell  has  spent  a  very 

considerable   amount  of  labor   in  preparing   the   state's  exhibits   in 

these  cases.     They  are  prepared  on  the  cost  accounting  theory.     Mr.   Cost  accounting 

Powell  has  made  segregation  of  passenger  train  and  freight  train  theoryf, 

operating  expenses  as  to  each  of  the  accounts  prescribed  by  the 

Interstate   Commerce   Commission.      He   and   the   entire    Nebraska 

Commission  are  of  the  opinion  that  the  recent  decision  rendered  by 

Judge  Sanborn  in  the  Minnesota  rate  case  is  unfair  to  the  state  in 

the   matter   of   the   segregation   of   state    from   mterstate   operating 

expenses.     Mr.  Powell  seems  to  be  a  rate  ei^rt  of  very  unusual 

ability. 

Because  of  the  passenger  and  commodity  freight  rate  cases,  the 
Commission  has  been  unable  to  issue  any  further  orders  reducing 
passenger  or  freight  rates.  The  rate  department  made  a  very 
thorough  investigation  into  class  rates  and  issued  a  tentative  order 
continuing  first  class  rates  as  established,  but  establishing  the  spread 
on  a  fixed  basis.  In  order  to  secure  the  necessary  data  for  the  Methods  of 
order,  rate  expert  Powell  employed  a  force  of  thirty  girls,  who  securing 
copied  data  from  each  intrastate  waybill  issued  by  the  Rock  Island  ^"fo^^^l^<*n. 
and  Union  Pacific  during  the  months  of  July  and  October.  1908, 
and  January  and  April,  1909.  Mr.  Powell  showed  me  the  bound 
volumes,  of  which  there  must  have  been  about  thirty,  containing  this 
information,  by  stations.  The  record  as  to  each  waybill  shows  both 
the  compensation  which  the  railroad  companies  received  and  that 
which  they  would  have  received  had  the  order  gone  into  e^t 
This  work  cost  the  Commission  some  $5,000.00.  The  Commission 
did  not  finally  put  the  order  into  etfect,  for  the  reason  that  it  feared 
that  such  action  would  prejudice  the  cases  already  pending  in  the 
federal  courts. 

The  experience  of  the  Nebraska  Commission  and  of  other  com-  Policy  discussed, 
missions,  such  as  Oklahoma,  shows  that  if  the  railway  companies 
can  once  get  a  number  of  important  rate  cases  into  the  courts,  ^e 
hands  of  the  Commissions  are  very  largely  tied,  not  merely  as  to 
the  subject-matter  of  these  cases  but  also  as  to  all  other  rate 
matters.  There  is  always  the  fear  that  reductions  in  other  rates, 
while  these  are  pending  in  the  courts,  will  create  in  the  minds  of 
the  federal  judges  an  impression  that  the  Commission  is  a  radical 
commission  which  is  making  excessive  reductions  in  rates. 


58 


LOUIS  SLOSS  &  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


59 


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.1 

1^/ 


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VII. 

Monthly  Reports  from  Railroads. 

The  Commission  receives  from  each  railroad  of  the  stale  for  each 

month   a   report  on  printed   forms   prescribed   by   the   Commission, 

Detailed  reports  showing  for  each  station  the  following  information  as  to  interstate 

of  business  kept  business,   both   that   which   is   shipped   from   and   received   at  each 

at  each  railroad  station — cars  of  wheat;  cars  of  corn;  cars  of  grain  products;  cars 

station,  ^j  j.^^  jj^^i^.  Qjjjgj^  ^^j  Jq^Jj.  pounds  L.  C.  L.;  pounds  C.  L.; 

revenue  L.  C.  L.;  revenue  C.  L.;  passenger  ticket  sales.  The 
same  information  is  also  given  as  to  intrastate  business,  and  the 
amount  thereof  is  then  appropriated  to  the  sUte  of  Nebraska  on  a 
mileage  basis.  This  information  is  important  as  showing  the  amount 
of  business  done  at  each  station,  particularly  if  a  question  arises  as 
to  the  adequacy  of  station  buildings  and  facilities  at  any  particular 
point 

VIII. 

Annual  Reports. 

Section  9   of  the  Nebraska  Act  prescribes   a  large  number  of 
facts  which  must  be  shown  in  the  annual  report.     In  order  to  secure 
Interstate  the  necessary   facts  from  the  railroads,   the   Nebraska   Commission 
Commerce  uses  the   Interstate   Commerce   Conunission    form   as   a   basis.      In 
Commission  addition  to  the  information  required  therein,  Mr.  Powell  has  forced 
^*"^'"l"*.1^  the  railroads  to  furnish  the  total  number  of  passengers  and  revenue 
and  the  total  volume  of  freight  and  revenue  moving;    (a)   entirely 
within    the   state;    (t)    originating   within    and    moving    out;    (c) 
originating  without  and  moving  into;    (J)   moving  entirely  through 
without    originating    or    terminating   within.      A    large    number   of 
commissions,  following  the  example  of  Nebraska,  use  the  Interstate 
Commerce  Commission  form  of  railroad  reports  as  a  basis,  and  then 
add  certain  requirements. 


as  basis. 


DC 

Form  of  Accounts. 

TTic  Nebraska  Commission  has  prescribed  no  form  of  accounts.   No  special  form 
except  for  telephone  companies.     Mr.   Powell  said  that  the  Com-  ^^  accounts 
mission   had  not   done   so    for   the   reason   that   if   any   controversy     ^^""^^  • 
arises,   the  Commission  will  have  to  go  into  the  company's  books 
anyway.     In  this  respect  Nebraska  differs  very  materially  from  some 
of  the  best  commissions  in  the  country,  such  as  those  of  Wisconsin 
and   New   York,   which  have  prescribed   systems  of   accounts   for 
practically  all  the  railroads  and  public  utilities  and  which  lay  great 
stress  on  this  feature  of  their  work,  and  have  established  extensive 
and  efficient  statistical  and  accounting  departments. 


Physical  Valuation. 

A  statute  approved  April  5.  1909.  provides  that  it  shall  be  the 
duty  of  the  state  railway  commission  to  ascertain  the  physical 
valuation  of  each  railroad,  railway,  telegraph,  express,  telephone, 
and  stock  yard  company  within  the  state,  and  that  it  shall  make 
findings  as  to  the  total  value  of  each  railroad,  etc.,  the  number  of 
miles  of  railroad  and  the  average  value  of  line  or  track.  The 
statute  also  prescribes  some  nine  designated  elements,  the  sum  of 
which  shall  constitute  the  physical  valuation.  Tliese  elements  are 
not  in  all  respects  identical  with  those  which  are  prescribed  by  the 
Interstate  Commerce  Conunission.  The  statute  shows  the  danger 
of  having  the  legislature  go  into  the  details  of  a  question  which  is 
still  largely  in  a  formative  stage.  It  would  have  been  far  wiser, 
m  my  judgment,  to  have  provided  simply  that  the  Commission 
should  ascertain  the  value  of  the  properties  of  the  companies 
specified.  The  Commission  could  then  go  ahead  and  secure  light 
from  every  possible  source  and  be  guided  by  the  court  decisions 
which  are  appearing  from  time  to  time  on  this  question. 

Acting  under  this  statute,  a  force  of  some  twelve  men.  under 
Engineer  E.  C.  Hurd.  has  been  at  work  since  1909.  The 
Commission  prepared  forms  on  which  data  was  to  be  written  by 
the  railway   companies   and   secured   from   them  complete  profiles. 


Methods  used  to 
ascertain  ph}fsical 
valuation. 


Nine  designated 
elements 
considered  in 
ph\fsical  valuation. 


Field  work  of 
engineers. 


V 


hi 


60 


LOUIS  SLOSS  &  CO. 


Valuation  of 
railroad  lands. 


1   ' 


Methods  of 
appraisement. 


; 


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1 


IH 


Depreciation  of 
equipment. 


station  plats,  drawings,  and  designs.  This  data  has  now  been 
furnished  by  all  of  the  railroads  except  the  Union  Pacific  and  the 
Burlington.  The  Commission's  engineers  check  over  the  quantities 
from  the  profiles  which  arc  furnished,  but  do  no  actual  checking 
of  quantities  in  the  field.  They  also  ride  over  the  line  to  check 
up  certain  physical  features,  such  as  stations  and  other  buildings, 
crossings,  telegraph  poles,  fences,  rails,  general  character  of  the  land, 
and  character  and  importance  of  towns. 

The  valuation  of  the  lands  was  found  to  be  the  most  difficult 
task.     The  greatest  point  of  controversy  between  the  railroad  com- 
missions and  die  railroads  in  all  the  sUtes  is  the  question  as  to  how 
the  right  of  way  and  terminal  grounds  of  the  railroad  companies 
shall   be  valued.      The   Nebraska   Commission   first   sent  out  post 
cards    to    the    leading   bankers,    public   men    and    farmers   of    the 
different  counties,  asking  their  opinion  as  to  the  value  of  land  of 
different  designated   kinds   in   their   counties.      Abstract  companies 
were  Acn  paid  1 0  cents  apiece  for  reports  as  to  sales  of  land  within 
a  year  or  two  in  Ac  vicinity  of  the  right  of  way.      A  general 
inspection  was  then  made  of  the  rirfit  of  way  to  ascertain  whether 
it   was   better   or   poorer    than    Ae    general    run   of    land   in    the 
neighborhood.     Inspection  was  also  made  to  determine  how  much 
more  a  raUroad  would  have  to  pay  above  the  value  of  surrounding 
land  by  reason  of  the  cutting  up  of  farms  and  damages  to  property 
not   taken.      Minnesota    found   an  average  multiple   of   three   and 
applied    that   multiple.      Nebraska    applied    different    multiples    as 
conditions  varied,  ranging  from  one  and  twenty-five  hundredths  m 
cities  to  over  three  in  the  country,  but  averaging  two  and  six-tcnthi 
in  the  country.     This  question  as  to  whether  any  multiple  should 
be  used,   and  if  so  what  multiple,  is  one  of  the  most  important 
questions  in  connection  with  securing  a  physical  valuation. 

Probably  the  best  work  which  has  been  done  by  the  Nebraska 
engineering  department  has  been  its  work  on  the  depreciation  of 
equipment.  To  ascertain  the  depreciation  of  freight  cars,  the 
engineer  went  to  the  railroad  car  accounting  records  and  looked 
over  some  fifteen  thousand  cars  of  various  kinds  to  find  out  when 
they  were  discarded  or  rebuilt  or  wrecked  or  put  into  work  train 
service,  and  then  drew  a  curve  showing  the  results  of  his  tabulation. 


'vf 


t  ir 


I 


REPORT  OF  COMMISSIONER  THELEN. 


61 


and  thus  ascertained  the  average  length  of  life  of  each  type  of  car. 
Similar  work  was  performed  with  reference  to  passenger  train  cars, 
engines,  work  equipment,  rails  and  ties. 

The  engineer  found  the  items  returned  by  the  railroads  in  accounts 
1  to  33  of  the  Interstate  Commerce  Commission  to  be  about  right, 
but  found  it  necessary  to  make  very  material  reductions  in  the 
accounts  covering  general  expenses,  legal  expenses,  transportation  of 
materials,  equipment,  interest  and  commissions. 

After  receiving  the  report  of  its  engineer,  the  Commission  notifies  Owner  ma^ 
the  owners  of  the  property  and  sets  a  time  not  less  than  thirty  pJ'oiest  valuation, 
days  nor  more  than  sixty  days,  for  appearance  by  the  owner,  at 
which  time  he  may  show  cause  why  the  valuation  as  found  by  the 
Commission  should  be  altered.  The  state  contains  no  provision 
as  to  the  effect  of  the  Conunission*s  findings  nor  as  to  the  purpose 
for  which  the  valuations  are  to  be  used. 

Tlie  findings  of  the  Commission  with  reference  to  the  valuation 
of  the  first  of  the  railway  companies  simply  recite,  in  accordance 
with  the  provisions  of  the  statute,  that  on  July  I.  1910.  the  value 
of  the  road  was  a  certain  sum.  its  mileage  so  and  so  much  and  its 
value  per  mile  so  and  so  much. 


XI. 

Attitude  Toward  Physical  Valuation. 

The  Nebraska  Commission  regards  the  cost  of  reproduction  of  Attitude  of 
railroads,   as   a  basis   for   fixing  rates,   somewhat  in   a   light  of   a  Commissioners 
hot  potato,  especially  since  Judge  Sanborn  in  the  Minnesota  case  "^*"^"* 
held  that  the  railroads  are  entitled  to  a  7  per  cent  return  on  the 
extremely   high  cost  of  reproduction  found  m  that  case,  ignoring 
the  other  elements  suggested  in  Sm\fih  vs.  Ames,    The  conmiissioners, 
when  I  asked  them  what  they  were  going  to  do  with  the  valuation 
when  they  ascertained  it.  said  that  they  did  not  know.      Because 
of  Judge  Sanbom*s  decision  and  of  the  uncertainty  as  to  what  test 
the  United  States  Supreme  Court  may  ultimately  establish  as   the 
proper   basis   of   fixing   rates,    the   Nebraska   Commission   seems   to 
assume  a  half-hearted  attitude  towards  the  entire  question  of  physical 
valuation. 


I ., 


i' 


■  ■( 


H 


62 


LOUIS  SLOSS  &  CO. 


XII. 


New  Procedure  on  Appeau 

The  legislature   of    1911    amended   section    7   of   the   Railway 
Commission  Act  by  providing  that  proceedings  to  reverse,  vacate  or 
Evidence  taken  modify   orders  of   the   state  Commission   shall  be  brought  diretUy 
before  the  i„  the  Supreme  Court  of  the  state;  that  the  evidence  taken  betorc 
Commission  ^^^  Commission  shall  alone  be  considered;  that  the  Ume  of  appeal 
flZone  considered  ^^^^^  ^  jj^.^^  ^^  ^^^^  ^^^^^  ^nd  that  no  order  shall  be  held 
'"  '^^'       up  without  the  filing  of  a  supersedeas  bond  to  be  first  approved 
by  the  Commission.     These  provisions  are  in  line  with  those  con- 
tained  in   the   most   recent   statutes,   except   that   they   are   not  as 
complete  or  as  far-reaching  as  those  now  obtaining  m  Washington. 
Wisconsin  and  Oklahoma. 

Commissioner  Clarke  told  me  that  in  his  opmion  there  is  no 
doubt,  as  the  constitution  of  Nebraska  now  stands,  that  these 
provisions  are  valid.  The  first  test  of  these  provisions  will  probably 
be  made  in  connection  with  an  order  of  the  Commission  directing 
the  erection  of  a  brick  station  building  at  Wayne.  A  request  by 
the  railroad  for  a  certified  copy  of  the  proceedings  before  the 
Commission  in  this  matter  came  in  while  I  was  visitmg  the 
Commission. 

XIII. 
Changes  in  Schedules. 

CommUsion  must  The  statute  provides  that  the  carriers  shall  file  with  the  Com- 
approverate  mission  all  their  schedules  of  rates  in  etfect  on  January  I.  IVU/ 
schedules,  ,^^  ^ej^g  before  the  date  of  the  statute),  and  that  thereattef 
no  rate  shall  be  changed,  either  raised  or  lowered,  without  the 
Commission's  consent.  Dr.  Wimiett  thinb  that  this  is  a  saluUry 
provision  and  that  it  tends  to  produce  stability  of  rates.  1  he 
Commission  approves  reductions  almost  as  a  matter  of  course,  but 
almost  always  holds  a  hearing  in  cases  of  a  contemplated  increase. 


REPORT  OF  COMMISSIONER  THELEN. 


63 


Minnesota. 


Introduction. 

The  Railroad  and  Warehouse  Commission  of  Minnesota  was 
created  by  act  of  1 899.  The  Commission  has  jurisdiction  over  all  Jurisdiction. 
railroads  except  street  railways  (in  so  far  as  relates  to  the  carriage 
of  persons  and  property  wholly  within  the  limits  of  a  municipality) 
and  also  over  all  express  companies  and  public  warehouses,  including 
commission  houses  and  grain  elevators.  The  Commission  does  not 
have  control  over  public  utilities.  A  proposition  to  extend  the 
jurisdiction  of  the  commission  over  such  utilities  was  presented  to 
the  last  legislature  but  was  defeated  by  the  rural  telephone  com- 
panies, who  objected  to  the  clause  giving  to  the  Commission  power 
to  order  in  physical  connections  between  telephone  companies. 
Commissioner  Elmquist  was  of  the  opinion  that  a  public  utilities 
statute  containing  the  telephone  physical  connections  clause  would 
be  passed  by  the  next  session  of  the  legislature. 

Minnesota  does  not  have  a  stock  and  bond  law  nor  a  public 
convenience  and  necessity  law.  The  work  of  the  Commission  is 
limited  to  the  fixing  of  rates  and  the  regulation  of  service  of 
railroads  and  express  companies  and  public  warehouses,  as  above 
mdicated. 

II. 

Organization  and  Office  System. 

The  Commission. — ^TTie  commissioners  are  Judge  Ira  B.  Mills, 
chairman.  Charies  F.  Staples,  and  Charles  E.  Elmquist.  Judge 
Mills  is  a  lawyer  and  has  been  a  member  of  the  Commission  for 
more  than  ten  years.  Mr.  Staples  is  a  farmer,  a  man  of  considerable 
dignity  and  apparently  much  ability,  and  has  also  served  more 
than  ten  years.  Mr.  Elmquist  is  a  younger  man.  a  lawyer,  energetic 
and  apparently  well  posted,  and  has  been  a  member  of  the 
Commission  about  four  years. 


mn 


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LOUIS  SLOSS  &  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


65 


Commissioners 
elected. 


Personnel  of 
Commission. 


The   commi«ioner.   .re   elected   for   .   term  of   «x   year.,    and 
receive   a   .alary  of  $4,500.00  ^r  annum.     Tl.ey  dev^e  Aeu 
entire  time  to  the  duties  of  the  office    and  are  m  the  offi^  evej 
week  day.  except  wh«.  one  of  them  »  out  on  an  ^'^^^'^e 
Commi«ioner  Elmquist  wa.  strongly  opposed  to  a  *»"J  °*  "^ 
member,  for  the  reason  that  three  can  do  much  better  e.ecut,ve  work. 
Emplojees— The   employee,   of    the    CommMSion    are    A.    <-. 
Clausen.  «cretary.  who  attends  largely  to  the  warehouse  bu«n^. 
of  the  commission  and  prepare,  a  part  of  the  annual  repor  ;  Thomas 
Yapp,  assistant  «creUry.  who  attend,  to  the  deud.  of  J.e  rad- 
ro.5  and  e:.pre.s  work  of  the  Commission  and  »  «» J'-  J^ 
capable  man:    D.   J.   Jurgensen.   eng.neer  m  charge  of   physical 
vaLtion:    one  rate  clerk   (but  no  rate  expert):  two  clerks  and 
Aree  steriographers.     TTie  act  of  April  13.   191    .  «PP"P"»'"  *« 
,um  of  $30,000.00  for  the  annual  expenses  of  the  Commission. 
ThU   doe.  not   include   the   amount   of   money   expended   m   the 

Minnesota  rale  case.  .     ^  »^ 

O^ce  Sj«tem.-But  litde  attention  is  paid  by  the  Comm-on  to 
Ae  matter  of  office  .y..em.  No  minute,  are  kept  Order,  are 
*:p°ed  informally  and  .ent  out  by  letter.  Mo,t  of  the  busmess  ^ 
L  Commission  U  done  informally  in  the  office.  Schedule,  of  ra^ 
1  filed  by  railroad,  and  are  indexed  in  a  book.  Mr.  Yapp 
prefer,  a  b««k  to  a  card  system  by  reason  of  iu  greater  permanency. 

III. 

Express   Investigation. 

!n.esii,aiion  of        I  went  .uite  thoroughly  into  the  J;- j^^^^^^^^^^^^  ^^^^^ 

Wells.  Fargo   Commission  has  been  conductmg  mto  the  expre^  1^'%?.   p^.^o 

&  Co.  express    f,,,,  &  Company.      The  Commission  was   told  by   Wells-Fargo 

^^'«-    &  Company  that  they  could  not  secure  the  mformation  -^^-J^  J^J 

desired  except  by  sending  a  force  of  men  to  the  New  York  office 

of   the   express   company.      The   Commission,    accordmgly.    sent   a 

number  of  men  to  New  York,  where  they  spent  ^^-^f^^^^y^s 

year  in  going  over  all  the  waybills  covermg  a  period  of  two -n^^ 

Mr    Yapp  showed  me  the  book^about  mne  feet  of  them-mto 

which   the   transcript  of    the   records   of   the   ^-^^^^^  ."^^^^J^ 
New  York  was  made.     These  books  contam  spaces  for  the  names 


Orders 
Informal. 


of  the  places  of  origin  and  destination  of  each  package  affecting 
Minnesota  business,  and  also  columns  for  the  different  rates;  thus, 
a,  b.  c.  d,  e.  10,  15.  etc..  up  to  and  including  100,  and  separate 
books  for  the  special  rates  on  poultry,  milk,  laundry,  beer,  and  a 
few  other  conmiodities.  There  are  also  separate  books  for  inter- 
state, intrastate,  intra-interstate,  and  inter-intrastate  shipments.  The 
books  also  show  the  revenue  derived,  the  number  of  transactions 
and  number  of  packages  and.  in  the  case  of  the  interstate  business, 
the  amount  of  the  revenue  chargeable  to  Minnesota.  This  amount 
is  ascertained  on  the  "rate-prorate"  basis;  i.  c..  the  rate  from 
'  the  outside  point  to  the  Minnesota  gateway  through  which  it  passes 
is  to  the  rate  from  the  Minnesota  gateway  to  the  Minnesota  point, 
as  the  earnings  received  by  the  express  company  are  to  the  amount 
of  earnings  assigned  to  Minnesota.  The  receipts  from  money 
orders,  custom  house  brokerage,  and  similar  items  were  taken  off 
for  the  whole  system,  and  a  proportion  of  them  was  then  allocated 
to  Minnesota. 

The  Minnesota  employees  went  through  some  nine  million  way- 
bills in  New  York  City  to  ascertain  those  affecting  Minnesota 
business,  and  found  some  125.000  for  the  month  of  August.  1909. 
and  225,000  for  the  month  of  December.  1909.  Wells-Fargo  & 
Company  likewise  had  a  force  of  men  examining  the  same  waybills. 
Mr.  Yapp  told  me  that  this  work  had  cost  the  Minnesota  Com- 
mission some  $30,000.00.  It  is  the  most  thorough  work  which 
has  been  done  in  this  country  in  the  matter  of  express  investigations. 

The  testimony  concerning  the  express  end  of  the  business  had 
all  been  presented  when  I  was  in  St.   Paul,  and  I  read  over  the 
entire  transcript     The  express  company  presented  no  evidence.     I  Express  company 
have   no    doubt   whatsoever   that    the   express    company    is    simply  presented  no 
waiting  to  tie  the  hands  of  the  Commission   in  the  courts.      The   ^i^^nce. 
Minnesota   Commission   is  also  examining  the  railroad   end  of   the 
express  business,   and  will  take  testimony  as  to  this  matter  before 
finally  deciding  the   case.      I   examined   carefully   all   the  exhibits 
introduced  by  the  state,   for  the  purpose  of  using  this  information 
m  our  own  express  investigation. 

The  results  secured  by  the  Minnesota  Commission  showed  that  Result  of  express 
the  express  company  was  making  a  profit  of  some  1 8  or  1 9  per  cent   rate   im^estigation. 


j\^ 


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67 


Most  famous 
rate  case. 


Decision 

disregarded 

every  question 

except  cost  of 

reproduction. 


Creat  difference 

betiveen  original 

cost  and  present 

assigned 

valuation 

discussed. 


on  that  part  of  its  property  which  could  fairly  be  chargeable  to  its 
state  business,  and  some  74  per  cent  on  that  part  of  its  Minnesota 
property  which  is  chargeable  to  the  interstate  business. 

IV. 

Minnesota  Rate  Case. 

The  legislature  of  1907  passed  a  2  cent  maximum  passenger 
fare  law  and  a  maximum  commodity  freight  law.  The  passenger 
rates  went  into  effect,  and  the  freight  rates  were  about  to  go  into 
effect  when  stockholders  of  the  railroads  affected  secured  an 
injunction  from  the  federal  courts.  The  matter  was  thereafter 
referred  to  Commissioner  Otis  as  referee.  After  taking  some  twenty 
volumes  of  testimony  and  going  into  the  entire  matter  of  valuation 
of  the  Minnesota  railroads  de  novo,  regardless  of  the  finding  of 
the  Minnesota  Commission  therein.  Commissioner  Otis  rendered  a 
report  which  was  affirmed  by  Judge  Sanborn  in  the  now  famous 
Minnesota  rate  decision.  Judge  Sanborn  disregarded  every  basis 
of  rate  fixing  except  that  of  the  cost  of  reproduction  of  the  prop- 
erty and  found  a  cost  in  this  case,  which,  according  to  the  general 
consensus  of  opinion,  is  at  least  50  per  cent  in  excess  of  the  cost 
as  shown  by  the  evidence  in  the  case.  He  also  found  an  inter- 
ference by  the  proposed  state  rates  with  interstate  commerce. 

The  Minnesota  Commission,  as  well  as  the  other  Northern  and 
Middle  Western  Commissions  which  I  visited,  arc  very  much 
exercised  over  the  Minnesota  rate  case.  I  had  a  talk  with  Judge 
O'Brien,  who  is  handling  the  case  for  the  state  before  the  United 
Slates  Supreme  Court.  He  told  me  that  the  motions  to  hear  the 
Oregon.  Missouri,  and  Arkansas  cases  contemporaneously  with  the 
Minnesota  case  at  the  October  term  had  been  granted.  Judge 
O'Brien  pointed  out  the  enormous  variance  between  the  original 
cost  and  the  present  assigned  value  of  the  railroad  properties 
involved  in  the  case.  He  regards  the  four  hundred  foot  strip  of 
right  of  way  acquired  from  the  government  as  a  franchise  on 
which  the  railroad  is  not  entitled  to  a  return.  He  also  denies  the 
right  of  the  railroads  to  multiply  the  present  market  value  of  the 
land  by  a  multiple  to  represent  the  increased  cost  of  securing  the 
same.     Judge  O'Brien  thought  that  he  saw  a  preconcerted  plot  on 


the  part  of  the  railroads  to  urge  on  a  number  of  the  state  com- 
missions to  adopt  the  cost  of  reproduction  as  the  basis  of  rate  fixing. 

The  Minnesota  commissioners  pointed  out  to  me  that  as  to  more  Value  of 
than   half   of   the   railroads   of   the   state,    the   value   of   the   stock^^^^^rities 
and    bonds   is    greater    than    the   Commission's   estimate   as    to    ihe^^'"^^'^^^ '^ 
value  of  the  properties,  but  is  less  than  the  cost  of  reproduction  as''^'"'  ^ 
returned  by  the  railway  companies.      To  meet  the  decision  in  the^'''^'  '"* 
Mmnesota    rate    case,    the    legislature    of    1909    passed    a    statute 
providmg  that  whenever  a  common  carrier  resists  the  enforcement 
of  an  order  of  the  Commission  prescribing  rates,   it  shall   be   the 
duty  of   such  carrier   to   keep   an   account  of  every   charge   made 
by  It  for  any  service  to  which  such  rates  apply,  showing  in  each 
case   the   name   and   address   of   the   consignor   and   consignee,    the 
date   of   the   transaction,   the   stations   between   which   the   business 
was   carried,   and   the   amount   actually   charged,    and    that   which 
would    have    been    charged    under    the    rates    prescribed    by    the 
Commission.     A  report  containing  these  matters  must  be  made  to 
the  Commission  every  month.      Within  sixty  days  after  the   final 
determmation    of    the    proceedings,    the    carrier    must    pay    to    the 
Railroad  and  Warehouse  Commission,  for  the  benefit  of  the  parties 
entitled   thereto,   all   sums   collected   by   it   in   excess   of   the    rates 
finally  prescribed  by  the  court,  with  interest,   and   the  Commission 
thereupon  pays  out  these  moneys  to  the  parties  entitled  thereto.     All 
amounts  not  claimed   are  paid   by   the  Commission   into   the  state 
treasury  for  the  benefit  of  the  general  revenue  fund.     Under  this 
statute,  the  railroads  involved  in  the  Minnesota  rate  case  are  now 
keepmg  books  and  making  returns  to  the  Commission. 

In  concluding  this  subject.  I  would  say  that  the  Minnesota 
Commission  is  even  more  exercised  over  the  decision  with  reference 
to  the  rale  fixing  basis  than  over  that  part  of  the  decision  which 
refers  to  interference  with  interstate  commerce. 

V. 

Federal  Courts. 

One  of  the  greatest  difficulties  facing  certain  of  the  state  com^  Efforts  to  hamper 
missions    m    districts    in    which    the    federal    judges    seem    to    h^Commission. 
unfriendly,   is   the  facility  with   which   the  corporations  can  secure 


i 


;i 


J 


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68 


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REPORT  OF  COMMISSIONER  THELEN. 


69 


from  such  judges  restraining  orders  and  temporary  injunctions  tying 

the  hands  of  the  Commission  for  several  years,  until  the  cases  are 

Litigation  determined.       However    carefully    a    statute    may    prescribe    the 

should  be  procedure  in  cases  on  appeal  from  the  orders  of  the  Conmiission, 

tried  in  ^^  federal  courts  are  not  bound  by  such  provisions  and  proceed 

ji^.t    according  to  their  own  rules.     Chairman  Mills,  while  chairman  of 

the  committee  on  legislation  of  the  National  Association  of  Railway 

Commissioners,  accordingly  presented,  and  the  association  adopted, 

a  resolution  to  be  adopted  by  the  different  state  legislatures,  calling 

upon  their  representatives  in  congress  to  pass  a  statute  providing 

that  litigation  affecting  state  railway  and  public  service  commissions 

should  be  carried  through  the  state  courts  iirst  before  being  taken 

into  the  federal  courts.     The  Minnesota  legislature  passed  such  a 

resolution,  but  no  other  state  has  done  so. 

VI. 
Changes  in  Rates. 

Changes  must       Changes  in  rates  become  effective  on  ten  days*  notice,  but  only 

he  approved  hv  j£   approved   by    the   Commission.      Mr.    Yapp    thinks   it    a    wise 

Commission.    pyQ^j^^  ^^  jjj^yg  ^^  Commission  approve  every  change  in  rates. 

He  considers  this  method  a  very  desirable  one  for  the  reason  that 

Ae  Commission  in  this  way  secures  a  whip  handle. 

Reductions  in  rates  are  allowed  as  a  matter  of  course,  but  if 
they  affect  common  points  Mr.  Yapp  generally  telephones  to  tfie 
other  companies  affected  and  asks  them  if  they  wish  to  put  in 
the  same  rate.  This  is  done  in  a  spirit  of  fairness  to  prevent  one 
railroad  from  securing  an  advantage  over  others  by  means  of 
**midnight  tariffs.** 

VII. 

Grade  Crossings. 

Commissioner       j^^  statutes  of   Minnesota   do  not   give   authority   to   the   state 

L  I-  L       i  Commission    to   prescribe    a    separation    of    grade    crossings.      Mr. 
a()oiisnmeni  ,  ,  r  i       i        • 

of  grade  Yapp  told  me  that  these  matters  were  taken  care  ot  by  the  city 

crossings,  authorities  and  that  no  authority  to  order  a  separation  of   grades 


exists  as  to  those  portions  of  the  state  which  are  outside  of  city 
limits.  He  thinks  it  well  to  handle  the  problem  while  it  is  in  its 
infancy,  as  proposed  in  California. 

VIII. 

Physical  Valuation. 

I  had  a  long  telk  with  Engineer  Jurgensen  with  reference  to 
the  work  of  the  Conmiission  in  ascertaining  the  value  of  the 
railroads  of  Minnesota.  This  work  took  about  three  years.  The 
Commission  employed  some  two  to  fifty  men,  with  an  average  of 
about  sateen  to  eighteen.  During  the  first  year,  but  little  was 
accomplished.  It  was  found  impossible  to  ascerUin  the  original 
cost  of  construction.  The  railroad  companies  furnished  to  the 
commission  information  concerning  the  present  value  of  their  systems. 
The  chief  work  of  the  engineering  department  of  the  Commission 
consisted  in  checking  over  these  returns.  To  ascertain  the  value  of 
the  rights  of  way  of  the  railroads,  abstracts  of  sales  in  the  vicinity 
were  taken  from  the  records.  A  total  of  about  1,500,000  sales 
were  examined  by  the  Conmiission  in  reaching  its  conclusions. 
Considerable  difficulty  was  encountered  on  the  question  as  to 
how  to  estimate  the  cost  of  reproduction.  The  railroads  contend 
that  this  means  the  cost  of  acquiring  the  lands  as  of  to-day  and 
that  they  are  entitled  to  multiply  the  present  real  value  of  adjacent 
lands  by  some  multiple  such  as  the  figure  three  in  order  to  ascertain 
the  present  cost  of  reproduction.  The  Commission  denies  the  right 
to  use  such  a  multiple.  The  Commission  accordingly  prepared 
valuations  on  both  theories. 

None  of  the  railroads  made  returns  as  to  the  present  value  of 
their  properties.  Their  returns  were  simply  as  to  the  cost  of 
reproduction.  It  is  impossible  for  the  Conmiission,  by  reason  of 
the  age  of  the  railroads,  to  ascertain  the  original  cost,  otherwise  it 
certainly  would  have  done  so. 

The  statutes  of  1909,  chapter  147.  provide  that  the  Commis- 
sion shall  at  all  times  keep  up  the  physical  valuations  of  the  rail- 
roads of  the  state.  Under  this  statute  the  engineer  sends  out  each 
year  forms  for  additions  and  betterments  and  deductions. 


Enormous  amount 
of  work  in 
ascertaining 
ph}fsical  valuation 
of  railroads. 


Railroads  simply 
report  cost  of 
reproduction. 


70 


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• « 


DC 

Form  of  Accounts. 

Railroad      Chapter  327  of  the  Laws  of  1911   makes  it  the  duty  of  every 
accounts  must  railroad  to  keep  its  accounts  in  such   form   as  to  show  the   total 
show  detailed  jgyenue  and  the  total  operating  expenses  connected  both  with  local 
^*  and  through  traffic,  the  number  of  tons  of  freight  carried  one  mile 
both  on  local   and   through   trains   and   the   total   car,   engine   and 
other  mileage  of  both  interstate  and  intrastate  freight.     Tht  Com- 
mission is  now  engaged  in  working  out  the  form  of  these  accounts. 
There  is  no  doubt  in  my  mind  that  this  statute  is  the  direct  result 
of  the  decision  in  the  Minnesota  rate  case  and  that  its  purpose  is 
to  force  the  railroad  companies  to  keep  their  accounts  at  all  times 
in  such  condition  as  to  enable  the  state  commission  to  secure  readily 
the  information  necessary  in  case  any  of  its  orders  fixing  rates  are 
attacked. 

X. 

Service  and  Facilities. 

Service  matters  Considerably  over  three-fourths  of  the  present  work  of  the 
quickh  settled.  Commission  deals  with  matters  affecting  service  and  facilities. 
About  93  per  cent  of  these  matters  are  settled  informally  by 
drawing  them  to  the  attention  of  the  railway  company  atfected. 
This  experience  of  the  Minnesota  Commission  emphasizes  thef 
necessity  of  giving  the  State  Railroad  Commission  control  over 
these  matters  in  addition  to  the  control  of  rates. 

XI. 

Interstate  Commerce. 

Commission      The  Commission  takes  up  with  the  railroads  a  large  number  of 

represents  people  matters    atfecting    interstate    commerce    and    settles    most    of    them 

before  Interstate  informally.     In  this  way.  the  Commission  performs  a  great  service 

Commerce         ^^^   citizens   of   Minnesota.      If   the   matter   is   one   of   public 

Lommission.  ..ni  ••  'lli* 

importance,  the  state  Commission  files  the  petition  with  the  Inter- 
state Commerce  Commission,  appears  as  party  complainant  and 
conducts  the  litigation  at  the  expense  of  the  state. 


XII. 

Accident  Reports. 

Whenever  an  accident  occurs  in  connection  with  railroad  opera-   Accidents  must 
tion,  the  railroad  company  at  once  telephones  or  telegraphs  to  the    he  reported  at 
Commission;    then   follows  a  preliminary  accident  report  and  later    ^"^^* 
a   final   report.      TTiese   reports   are   kept  in   a   large   file   arranged 
consecutively  by  numbers.     An  index  kept  in  a  large  book  shows 
the  name  of  the  town  or  city,  the  name  of  the  person,  the  date  of 
telegraphic  or  telephonic  report,  the  date  of  the  second  and  third 
reports   and   the   number  of   the   case.      These   reports   are   entered 
by  railroads  and  are  arranged  alphabetically. 

XIIL 
Litigation. 

The   legislature  of   Minnesota   in  its  sessions   for    1905.    1907,   Discussion  of 
1 909  and    1911,  passed  a  large  number  of  special  acts  affecting  advisahilityf  of 
the  Commission.      Nearly  all   of   these   acts  deal   with  matters  of   granting  general 
detail  as  to  which,  in  my  judgment,  it  would  have  been  wiser  to  ^^^^^.  'p 
have  given  general  powers  to  the  Commission.     For  instance,  special 
acts  were  passed  to  provide  that  railroads  must  use  the  same  names 
for  stations  as   the   names  of  the  cities  within  which   the   stations 
are  located;    that  the  time  of  the  arrival  of  passenger  trains  must 
be  bulletined;    that  the  commission  shall  have  jurisdiction  over  track 
scales;      that    the    commission    shall    have    authority    to    keep    up 
physical   valuations    from   year   to   year;     that   railway   companies 
shall  clean  ditches  and  culverts  along  roadbeds,  etc.     The  difficulty 
which  Minnesota  has  had  with  these  matters  would  seem  to  show 
the  wisdom  of  giving  to  the  Commission  general  powers  by  statute 
over  all  matters  affecting  the  rates  and  service  of  the  public  service 
corporations   affected.      The   Commission    can    then   work   out   the 
details  in  such  manner  as  experience  may  show  to  be  wise. 


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REPORT  OF  COMMISSIONER  THELEN. 


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WISCONSIN. 


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I 


M 


Introduction. 

The  Railroad  Commission  of  Wisconsin  was  created  by  statute 
of  1905,  and  is  largely  the  work  of  the  then  Governor,  Robert  M. 
La  Follette.  Before  that  time,  the  state  had  a  railroad  commis- 
sioner, whose  chief  function  was  to  publish  the  reports  transmitted 
by  the  carriers.  In  1907,  the  legislature  also  passed  a  public 
utilities  law  conferring  upon  the  state  railroad  commission  authority 
over  public  utilities.  Both  these  statutes  were  amended  in  1909 
Jurisdiction,  and  1 9  H .  Under  the  railroad  commission  statute,  the  Commis- 
sion has  jurisdiction  over  commercial,  street  and  interurban  railways, 
express  companies,  telegraph  companies  and  common  carriers.  Under 
die  public  utilities  law,  it  acquired  additional  jurisdiction  over 
telephone,  heat,  light,  water  and  power  companies,  including  those 
owned  or  operated  by  municipalities. 

Wisconsin  has  a  stock  and  bond  law  enacted  in  1907  and 
materially  amended  in  1 9 1 1 ;  a  public  convenience  and  necessity 
law  enacted  in  1907;  and  an  indeterminate  permit  law  providing 
indeterminate  franchises  and  for  purchase  by  municipalities,  enacted 
in  1907  and  materially  amended  in  1911. 

IL 

Organization  and  Office  System. 

The  Commission. — The  commissioners  are  John  H.  Roemer, 
Qualifications  of  chairman.  Halford  Erickson  and  David  Harlowe.  The  statute 
Commissioners,  provides  that  one  of  the  commissioners  shall  have  a  general  knowl- 
edge of  railroad  law  and  that  each  of  the  others  shall  have  a 
general  understanding  of  matters  relating  to  railroad  transportation. 
Mr.  Roemer  within  the  last  year  took  the  place  of  Professor 
B.  H.  Meyer,  who  was  recently  appointed  to  the  Interstate  Com- 
merce Commission.  Mr.  Roemer  is  an  attorney  and  performs  all 
the  legal  work  of  the  Commission.  Mr.  Erickson  was  formerly  a 
railroad  auditor  and  is  an  economist  and  statistician  of  very  excep- 
tional ability.     He  seems  to  secure  the  data  for  most  of  the  rate 


decisions  of  the  Commission,  and  has  worked  out  carefully  a  plan 
for  the  segregation  of  operating  expenses  between  freight  and 
passenger  traffic  He  is  also  practically  the  head  of  the  depart- 
ment of  statistics  and  accounts,  one  of  the  most  important 
departments  of  the  Commission.  Mr.  Harlowe  was  recently 
appointed  on  the  resignation  of  Professor  Meyer.  He  was  traffic 
manager  of  one  of  the  large  Milwaukee  commercial  firms. 

The  commissioners  are  appointed  by  the  Governor  for  periods  Commissioners 
of  six  years  and  receive  a  salary  of  $5,000.00.  All  of  them  ^PP^"^«<'- 
devote  their  entire  time  to  the  work  of  the  Commission.  Mr. 
Roemer  tells  me  that  he  often  works  into  the  night  and  I  am 
confident  Mr.  Erickson  does  the  same.  In  my  opinion  the  splendid 
work  of  the  Wisconsm  Commission  is  largely  due  to  the  ability  of 
the  commissioners  and  to  their  close  personal  attention  to  the  work. 
A  spirit  of  scholarly  accuracy  and  thoroughness  pervades  the  entire 
work  of  the  Commission.  The  Commission  takes  no  short  cuts 
and  makes  very  few  guesses.  Every  problem  is  worked  out  with 
great  care  and  no  decisions  are  rendered  until  the  Commission  has 
all  the  facts  at  its  disposal.  In  my  judgment,  the  thorough  an4 
scholarly  spirit  of  the  work  is  largely  the  result  of  the  intimate 
relation  which  exists  between  the  Conmiission  and  the  professors 
and  alumni  of  the  State  University. 

Employfces. — The  Commission  divides  its  work  into  three  depart-  Departments, 
ment    (1)    administrative;     (2)    engineering;     (3)    statistical   and 
accounting. 

The  administrative  department,  besides  the  commissioners,  con- 
sists of  J.  M.  Winlerbotham.  the  secretary,  who  receives  a  salary 
of  $2,500.00  per  year;  a  clerk  for  each  commissioner,  to  work 
up  law  points  and  digest  testimony;  and  about  a  half  dozen 
stenographers  and  reporters. 

The  engineering  department  is  headed  by  Professor  Pence, 
professor  of  railway  engineering  in  the  University  of  Wisconsin. 
The  work  of  this  department  is  subdivided  into  the  work  of  physical 
valuation,  and  service  and  field  inspection.  To  perform  the  work 
of  physical  valuation.  Professor  Pence  has  men  who  are  especially 
qualified  to  value  real  estate,  railroad  properties,  gas  and  electrical 
plants,  water  works,  telephone  plants,  etc.  Professor  Burgess  of 
the  Department  of  Mechanics,  of  the  State  University,  is  advisor 


74 


LOUIS  SLOSS  &  CO. 


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ii  * 


1 1 


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j 


i.i 


f 


m  the  work  of  service  and  field  inspection.  This  work  also  if 
subdivided,  Mr.  Cadby  having  charge  of  gas,  electric  and  tele- 
phone inspection.  Professor  Mack  of  the  water  plants,  etc. 

Statistical  The  statistical  and  accounting  department  is  headed  by  Mr. 
Department.  Edwin  Gruhl,  who  has  immediate  charge  of  the  statistics  and 
accounts  of  the  public  utilities,  while  Mr.  Schneider  has  charge  of 
similar  work  in  connection  with  railway  and  express  work.  Mr. 
Hogan  and  one  assistant  have  charge  of  railway  and  express 
tariffs.  Some  five  or  six  men  in  the  department  are  occupied  all 
the  time  with  matters  in  controversy  before  the  G>mmission  and 
special  problem  work. 

Duties  of       Office  S}fstem.     The  secretary  receives  and  distributes  all  mail. 

Secretary.  All  letters  when  answered  are  returned  to  him  and  he  sends  out 
the  answers  in  the  name  of  the  Commission  by  himself  as  secretary. 
All  formal  and  informal  complaints  are  separately  numbered  and 
filed  both  as  to  railroad  cases  and  public  utility  cases.  A  separate 
file  is  also  kept  for  all  applications,  such  as  for  leave  to  issue  stock 
and  bonds  and  to  buOd  extensions.     An  alphabetical  file  is  also  kept. 

III. 

Procedure  on  Appeal. 

The  Wisconsin  Railway  and  Public  Utilities  acts  both  provide 
for  an  action  in  the  Circuit  Court  of  Dane  County  to  set  aside  the 

Nexp  evidence  orden  of  the  Commission.  If  any  new  evidence  is  presented,  the 
mayf  be  court  must  certify   the  case  back  to  the  Commission,   which   then 

introduced  into  reviews  its  order  in  the  light  of  the  new  evidence,  and  thereafter 
'^'*  returns  its  findings  to  the  court.  An  appeal  directly  to  the  Supreme 
Court  was  not  provided  for,  because  of  a  constitutional  difficulty 
involving  a  question  whether  an  appeal  would  lie  directly  to  the 
Supreme  Court  from  an  administrative  board.  The  legislature  of 
1911  passed  an  amendment  to  the  Railway  and  Public  Utilities 
acts  providing  for  notice  to  stockholders  and  bondholders,  by 
publication,  in  case  of  the  acquisition  of  a  public  utility  by  a 
municipality,  so  that  they  might  have  their  day  before  the 
Commission.  Mr.  Roemer  is  of  the  opinion,  under  the  Prentiss 
case.  211  U.  S.  2 1 0.  that  if  the  state  statute  provides  the  procedure 
for  an  appeal,  with  power  on  the  part  of  the  court  to  revise  the 


REPORT  OF  COMMISSIONER  THELEN. 


75 


rate,  that  procedure  must  be  followed  before  the  case  can  go  into 
the  federal  courts.  Mr.  Roemer  prefers  the  Wisconsin  procedure 
to  the  right  of  review  provided  by  the  Washington  statute,  for 
the  reason  that  he  doubts  the  applicability  of  a  writ  of  review  to  a 
case  in  which  the  Commission  is  authorized  to  consider  evidence 
extraneous  to  the  record.  This  objection  has  not  prevailed  in  other 
states,  such  as  New  York,  Nebraska,  and  Oklahoma,  in  which 
the  remedy  is  review,  and  in  which  no  point  has  ever  been  raised 
to  the  effect  that  this  is  not  the  proper  remedy.  The  New  York 
Commission,  however,  is  careful  to  put  into  the  record  all  the 
evidence,  so  far  as  possible,  which  was  in  any  way  considered  by  it 
Mr.  Roemer  states  that  the  practical  effect  of  the  Wisconsin 
procedure  is  to  force  the  corporations  to  apply  for  a  rehearing  before 
the  Commission — this  rehearing  being  granted  as  a  matter  of  course. 

IV. 

Rate  Fixing. 

Hie  rate  fixing  basis  of  the  Wisconsin  Commission,  as  explained 

to  me  by   Chairman   Roemer   and   Commissioner   Erickson,   is   the 

cost  of  reproduction  of  the  properties  affected,  subtracting  deprecia-  Elements  used  in 

tion   and  adding  an   amount  for  going  concern  value.      In   deter-  fixing  rates, 

mining   the   present   value,    the    Commission    disregards    density    of 

traffic,  density  of  population,  and  market  value  of  stocks  and  bonds. 

In    response    to    a    suggestion    that    the    Oregon,    Nebraska,    and 

Minnesota  commissions  were  very  much  concerned  over  the  physical  Discussion  of 

valuation  basis  for  rate  fixing  and  to  the  possibility  of  an  unreason-  methods  of 

able  increase  in  rates  resulting  from  increase  in  land  values.  Chair-  ^^<^^^.  ^'"'"e 

_  . ,    ,       ,  1 ,  L     •     •        I-  '.^       pn}fsicaL  valuation. 

man  Roemer  said  that  he  could  not  see  the  justice  or  permitting 

an  increase  in  land  values  to  owners  adjacent  to  a   railroad  and 

denying   the   railroad   a   return   on    its   own    increased   value.      He 

admitted,  however,  that  a  real  problem  arises  from  the  great  increase 

in  the  value  of  terminal  property  and  also  that  a  limit  will  have  to 

be  placed  on  rates  based  on  increasing  land  value.     Very  few  of  the 

Commissions   seem   to  have   thought   as   far   as   this,    and   none   of 

diem  to  have  reached  a  solution.     Chairman  Roemer  believes  that  a 

railroad  or  utility  is  entitled  to  a  rate  of  six  per  cent  on  its  market 

value,  this  being  usually  sufficient  for  five  per  cent  interest  on  its 

bonds  and  seven  per  cent  on  its  capital  stock. 


76 


LOUIS  SLOSS  &  CO. 


Rate  ^^Y^  The  rate  multiple  hitherto  used  by  the  Wisconsin  Commission 
•  has  been  two  and  a  half.  Commissioner  Erickson  has  serious  doubts 
as  to  whether  any  amount  ought  to  be  allowed  over  the  value  of  the 
adjoining  property.  He  seems  to  differ  from  Chairman  Rocmer  a« 
to  whether  a  railroad  should  be  entitled  to  a  return  on  rights  of  way 
granted  by  federal  or  sUte  governments,  Mr.  Roemer  being  of  the 
opinion  that  a  return  should  not  be  allowed,  while  Mr.  Erickson 
favors  a  return  to  make  up  for  the  first  lean  years  of  operation.  The 
Conmiission  never  allows  a  return  on  franchise  values  except  to  the 
extent  that  a  railroad  or  utility  actually  paid  for  the  franchise. 
The  Buell  Formal  case  No.  32.  known  as  the  Buell  case,  shows  clearly  the 
ca«e.  rate-making  theory  of  the  Commission,  and  is  probably  the  most 
important  case  which  the  Commission  has  decided.  The  bases  there 
laid  down  were  followed  by  the  Federal  Post  Office  authorities 
when  they  asked  for  information  from  the  railway  companies  as  to 
revenue  and  cost  of  operation  of  all  kinds  of  passenger  train  business, 
including  particularly  the  mail  business. 


Issues  of 

securities  must 

be  approved  b\f 

Commission. 


Foreign 

corporations 

come  under  the 

laHf. 


V. 

Stock  and  Bond  Law. 

Chapter  576  of  the  Laws  of  1907  provides  for  the 
approval  of  the  Commission  before  any  public  service 
corporation  can  issue  stock,  stock  certificates,  bonds,  notes, 
or  other  evidences  of  indebtedness,  payable  not  less  than 
one  year  from  date.  This  statute  gave  the  Commission 
no  discretion  as  to  approval  and  no  power  to  impose 
conditions,  nor  did  it  specify  the  purpose  for  which  the 
money  was  to  be  used.  I  understand  that  these  matters 
were  all  remedied  and  the  powers  of  the  Commission 
materially  enlarged  by  an  act  of  the  legislature  of  1911, 
adopted  just  before  I  reached  Madison. 

Foreign  corporations  owning  railroads  and  utilities  in 
Wisconsin  consider  themselves  bound  by  the  law.  The 
general  law  of  Wisconsin  has  for  some  time  provided  for 
a  fee  to  be  paid  on  an  increase  of  capital  stock,  but  has 
never  contained  a  provision  for  a  fee  on  an  issue  of  bonds. 
Another  act  of  the  legislature  of  1911  accordingly  provides 


REPORT  OF  COMMISSIONER  THELEN. 


that  upon  an  approval  of  a  bond  issue  by  the  Railway 
Commission,  the  corporation  affected  must  pay  a  fee  of  $1.00 
on  $1,000.00;  if  this  statute  had  been  in  effect  in  1910,  the 
fees  derived  from  it  would  have  paid  the  entire  expenses 
of  the  Commission.  The  imposition  of  such  a  fee  is  fair, 
for  the  reason  that  the  approval  of  the  governmental 
authorities  to  a  bond  issue  generally  results  in  a  raise  of 
a  point  or  two  in  the  sale  price  of  the  bonds.  It  will  be 
well  to  bear  this  point  in  mind,  in  framing  the  new 
California  statute. 


77 


VI. 

Indeterminate  Permits. 

Chapter  578  of  the  Laws  of  1907  provides  for  indeterminate 
permits  for  street  railways,  and  sections  74  and  86  of  the  Public 
Utilities  Act  of  1907  provide  a  similar  permit  for  heat,  light,  water, 
and  power  companies  in  municipalities.  An  indeterminate  permit  is 
a  permit  running  without  limit  as  to  time  and  having  attached  thereto 
die  following  two  conditions: 

1.  If  any  public  service  corporation  within  a  municipality  has 
complied  with  the  requirements  of  the  statute  as  to  the  surrender  of 
existing  permits  or  franchises  and  has  thereupon  secured  by  operation 
of  the  statute  an  indeterminate  permit,  no  license,  permit  or  franchise 
shall  be  granted  to  any  similar  concern  within  the  same  municipality 
unless  the  Commission  finds  that  public  convenience  and  necessity 
require  such  second  public  utility. 

2.  The  corporation,  by  acquiring  such  indeterminate  permit, 
consents  to  the  purchase  of  its  plant  by  the  municipality  in  which  it 
operates,  at  a  price  to  be  fixed  by  the  Railroad  Commission,  with 
the  right  of  appeal  to  the  courts  on  the  question  of  the  price. 

Chairman  Roemer  considers  these  provisions  concerning  inde- 
terminate permits  as  the  very  foundation  stone  of  the  regulation  of 
street  railroads  and  other  public  utilities  in  Wisconsin.  The  period 
within  which  the  corporations  might  bring  themselves  within  the  terms 
of  the  statute  was  extended  to  January  1,  1911,  but  only  25  per 
cent  of  the  public  service  corporations  availed  themselves  of  the 
privilege.     The  legislature  of  1911  finally  took  the  bull  by  the  horns 


Indeterminate 

permit. 

defined. 


Competition 
regulated. 


Consent  to 
municipal 
purchase 
required. 


Onl\f25%of 
corporations  avail 
themselves  of 
privilege. 


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79 


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ii 


and  provided  that   all  permits,    franchises   and   licenses   theretofore 
granted  by  any  public  authority  were  by  that  act  amended  so  as  to 
be  indeterminate  permits,  with  the  characteristics  hereinbefore  men- 
tioned.    Chairman  Roemer  is  strongly  in  favor  of  this  kind  of  permit 
and  states  that  the  only  reason  why  other  states  have  not  followed 
the  lead  of  Wisconsin  in  this  matter  is  that  they  do  not  understand 
Advantages  of  this  kind  of  permit.     He  points  out  the  following  advantages  accruing 
mdeieTminate  to  the  corporations: 
permit,        ,       tt.  . 

1.  They  receive  what  is  in  effect  a  perpetual  franchise. 

2.  They  are  relieved  of  the  necessity  of  providing  an  amortiza- 
tion fund. 

3.  They  are  assured  a  fair  price  in  case  their  plant  it  purchased 
by  the  municipality  within  which  they  operate. 

Such  permit,  on  the  other  hand,  is  of  great  benefit  to  the  state 
because  it  brings  the  public  service  corporations  directly  under  the 
control  of  the  Commission,  avoids  cut-throat  competition  and  gives 
municipalities  the  power  at  any  time  to  purchase  the  public  utilities 
within  their  limits,  at  a  fair  price. 

Chairman  Roemer  was  of  the  opinion,  however,  that  it  would  not 
be  wise  to  pass  such  a  statute  in  California  until  the  situation  resulting 
from  divided  control  of  public  utilities  between  state  and  local 
authorities  has  been  clarified. 

VII. 
Use  of  Facilities  by  Other  Utilities. 

Joint  use  of  Section  7947n-4  of  the  Public  Utilities  Law  provides  that  all 
equipment  public  utilities  having  conduits,  subways,  poles  or  other  equipment 
provided  for.  ^^^  ^^  u^jg^  ^^y  ^^^^^  ^^  highway  shall  for  a  reasonable  compensa- 
tion permit  the  use  of  the  same  by  any  other  public  utility  whenever 
public  convenience  requires  such  use.  Chairman  Roemer  considers 
this  to  be  an  important  provision  and  upon  his  suggestion  the  legis- 
lature of  1911  added  to  the  section  provisions  for  physical  connec- 
tions between  telephone  systems  in  such  cases  and  under  such 
conditions  as  might  be  prescribed  by  the  Commission.  Wisconsin 
and  Oklahoma  have  shown  clearly  the  public  benefit  derived  from 
physical  connections  between  telephone  systems. 


Remarkable 
increase  in  value 
of  railroad  lands. 


VIII. 

Physical  Valuation. 

Railroads, — ^The  valuation  of  the  railroad  properties  of  Wisconsin 
was  begun  in  1903  and  completed  several  years  ago.  In  1909  a 
new  valuation  of  the  land  of  all  the  railroads  was  made  by  the 
Commission  and  it  was  found  that  the  value  had  gone  up  consid- 
erably. The  railroads  now  render  each  year  statements  of  additions 
and  deductions  similar  to  those  rendered  in  Minnesota.  The  Com- 
mission usually  accepts  the  statements  of  the  larger  railroads,  which 
have  men  regularly  employed  in  the  work,  but  finds  it  necessary  to 
check  up  the  work  of  the  smaller  railroads. 

Utilities. — There  are  about  one  thousand  utilities  in  Wisconsin. 
Of  these  the  Commission  has  valued  some  fifty,  being  those  involved 
in  complaints  pending  before  the  Commission.  No  valuation  of 
utilities  had  been  made  except  in  case  of  complaint  as  to  rates. 
The  Commission  never  decides  a  case  involving  the  rates  of  a 
public  utility  without  having  first  ascertained  the  value  of  its 
property.  The  work  of  valuation  of  utilities  is  divided  among 
the  branches  of  the  engineering  department  A  hearing  is  always 
held  by  the  Conunission  after  the  engineering  force  has  completed 
its  report,   and  the  Commission   then  makes  its  findings. 

Tlie  statute  contains  no  provision  similar  to  that  of  Washington  for 
a  court  review  of  findings  as  to  value.  As  no  valuations  of  utilities 
have  been  made  except  in  cases  pending  before  the  Conunission, 
the  Washington  provisions  would  have  served  no  purpose  in 
Wisconsin  in  so  far  as  the  valuations  have  hitherto  been  made. 


Utilities  not 
valued  tp 
Commission 
except  in  case  of 
complaint. 


IX, 

Depreciation  Account. 

Section    179 7m- 15    of   the   Public   Utilities   Act   provides    dial   Depreciation 
each  utility  must  on  the  order  of  the  Conunission  carry  an  adequate   accounts 
depreciation    account    out    of    operating    revenues,    in    an    amount   ^xp^f^dca^nder 
prescribed    by    the   Commission,    for    the   purpose   of    keeping    the   p^^^;^,;, 
property  in  efficient  condition.     The  money  in  this   fund  may  be 
expended  for  new  construction,  extensions  or  additions  and  for  no 
other    purpose.      The    Commission    has    not   prescribed    a    general 


Com 


mission. 


.    ^-m-m    A-    ft^'*^    '^'< 


4 


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REPORT  OF  COMMISSIONER  THELEN. 


81 


percentage  but  does  prescribe  a  percentage  in  such  rate  cases  as 
it  decides.  The  Commission  directs  its  statistical  department  to 
ascertain  the  average  life  of  the  plant  and  of  the  different  compo- 
nent elements  thereof  and  then  establishes  a  percentage  of  depre- 
ciation so  that  if  the  money  is  put  out  at  interest  for  the  given 
number  of  years  the  value  of  the  plant  will  have  been  replaced. 
The  money  so  set  aside  may  be  used  for  other  purposes,  such  as 
new  construction,  but  when  the  money  derived  from  the  sale  of 
new  construction  bonds  is  realized,  the  amount  taken  from  the 
depreciation  account  is  returned  with  interest.  Commissioner 
Erickson  considers  this  matter  as  one  of  considerable  importance. 
The  ordinary  corporation  is  more  interested  in  declaring  large 
dividends  than  in  setting  aside  funds  for  the  replacement  of  its 
property. 

X. 

Public  Convenience  and  Necessity  Law. 

Certificate  of      Chapter  454  of  the  Laws  of   1907  provides  that  no   railroad 

Public  corporation   shall   begin   the  construction  of  any  proposed   line    of 
I\  ecessit\}      "I       J  1  *    r    r 

required.  '*"'^^^  °'  ™*"  ^^  extension  to  an  existing  line  without  having 
first  secured  from  the  Commission  a  certificate  that  public  convenience 
and  necessity  require  such  construction.  Before  the  railroad  is 
operated,  it  must  be  inspected  and  approved  by  the  Commission. 
This  matter  has  been  worked  out  in  greater  detail  in  the  New  York 
statute.  It  is  one  of  very  considerable  importance,  because  it  gives 
to  the  Commission  the  power  to  prevent  cut-throat  competition  and 
wasteful  duplication  of  plants  on  which  the  public  must  pay  interest 
in  the  form  of  rates. 

XL 
Rate  Changes. 

Changes  in  rates      Up  to    1911.   the  Wisconsin  statute  provided   that  no  changes 
subject  to  should  be  made  in  the  rates  of  a  railroad  or  public  utility  except 

CommJuion  "^°  °°'^^*  '^  ^^  Commission.     The  time  in  case  of  a  utility  was 

•  ten  days  and  in  case  of  a  railroad  thirty  days.     Unless  objection 

was  made,  the  rate  went  into  effect  without  further  action  on  the 


part  of  the  Commission.  In  odier  words,  the  approval  of  the  Com- 
mission was  not  a  condition  precedent  to  the  effectiveness  of  the  rate. 
The  result  was  that  there  was  very  little  work  for  the  railroad  rate 
department  and  this  work  was  all  done  by  one  rate  man  and  one 
assistant  The  legislature  of  1911.  however,  amended  the  existing 
statute  so  as  to  provide  that  no  changes  might  go  into  effect  without 
the  precedent  approval  of  the  Commission.  The  commissioners  are 
somewhat  doubtful  as  to  the  wisdom  of  this  change.  They  think 
that  the  railroads  may  possibly  use  this  provision  as  a  pretext  for 
refusing  to  establish  the  rates  desired  by  shippers.  Tlie  Wisconsin 
Conmiission  seems  to  have  done  very  little  work  in  fixing  railroad 
rates. 

XII. 
Municipal  Councils. 

I  have  already  stated  that  utilities  owned  by  municipalities  come  Municipall}f 
within  the  jurisdiction  of  the  Conunission  to  the  same  extent  as  other  on^neJ  Public 

Under  section  1  797m-87.  of  the  Public  Utilities  Law,  municipal  Commission 
councils  have  power  in  the  first  instance  to  determine  the  quality  and 
character  of  each  kind  of  product  or  service  and  the  terms  of  occu- 
pation of  streets,  but  not  the  power  to  fix  the  rates.  Even  as  to  the 
rights  exercised  by  the  councils,  the  Commission  has  the  right  to 
review  their  action  and  to  set  aside  their  ordinances.  The  Commission 
recently  declared  null  and  void  a  city  ordinance  directing  the 
completion  by  a  public  utility  within  sixty  days  of  work  which  could 
not  reasonably  be  performed  in  less  than  nine  months. 

It  should  be  noted  that  the  only  powers  of  regulation  or  control 
exercised  by  municipal  councils  are  those  which  are  particularly 
mentioned  in  1  79  7m-8  7  and  that  as  to  these  powers,  the  Conmiission 
has  the  right  of  review. 

XIIL 
Gas.  Electric  and  Telephone  Inspection. 

This  work  is  carried  on  by  a  branch  of  the  engineering  department 
under  the  immediate  charge  of  Mr.  Cadby.     For  the  purposes  of 


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i-  the  ^JZlt  tl^J^Tr^'^  •"  *•  ''"  "'•»'• 

.re  in  Ae  office,  in  LdiuTtoM     Sdr  '"r"""'     T"°  °"" 
men  engaged  in  thi,  wort  ^'  ""^  «  total  of  ni«, 

The  work  is  done  at  follows: 

Commission         "*  <"•''  Electric  Service —.Sm-h'/».    I7Q7     •>•»         «. 

regu/ato  Public  UtiliUe.  Law  pro^r'thlfl^^T    '^'^"^22  to  25  of  the 

»fanJar</  o/  standard  commerci^  ^ih  tf  nl.    »  "*"  ''"'"  ^"^""^  ^ 

</ua%  am/ ,„ea5uremenfT^I-.r  '^^""  °'  •*"•"•  "»»J"<1»  for  the 

measurement  o/  ^^Td  j.  I   ^     ^^^  "'T''  "*•  '°'"«''  »»d  "J"  and  regda! 
»ervice  of  Public         '  ""^  "■"  otamine  and  test  apDliance,  „».J  f„  •       , 

U,e>««'-ct  and  service  of  public  util^l^"  Un^r  ^^Zr  S' 
^s..o„.  after  „„^ero«  conferences  withle  bLt^^  c^fa' 

tions,  prescribed  Its  order  U-2I i^  .     .    j     i    r   ''''"'^°  corpora- 

.e^vce  i„  the  State  fwl^^t'^\%^"'^  «!~«ri' 
rule^  established  on  July  24     190ft    k  ^'^^^^    ^*" 

Acting  under  these  Jt  o'l'sult^  ^^^^  J^"-"- 

Zu^Td  :r lt;s^  ^^r  ^'^ 

proprietors  of  plants  howr.2;ed"rS  ^7^T^'-  ''^""^ 
while  traveling,  also  fill  out  reports  «!*,  l*  '"•^'°"* 

over  which  they  are  traveL^  '  ^'^^  °"  *'  "'''~'* 

with  .eir  expense  acr^a^d  a^renrUoX  SdT  aTe:rei' 
The  inspectors  are  all  Universitv  nf  M/  'a^^ads  affected. 

P.id  between  $90.00  ^HS.C^'  ^Tnl  '^"''"""  -""^  ^ 

/^iV /e/epAone  investigTurinl^  t".  '  ^^^^^^ 

inspection,  to  the  different  cities  of  AesUte  ^J  ^  '''  ^'"  *'^  '^"^ 
hundred  and  twelvr  tSJhon  li  r  ""•~'^^°'  *^  ™*^«  <>«« 
stations.  T^erijtl  ;V±  'If  ^'  ^^^?  *'^  **  P»^ 
answers,  the  time  therearbetel%:^t ,  Z'^  "^^T  ""^'^ 
and  the  frequency  of  "busy"  and  ^Z^^  ..       ^'  '""^  *'"^*"- 

of  these  trials  are  then  nL  A      j  *"•"""'     '^P^^'^'*  '">«  '«"it« 

affected.    Cl^Tdl^'^  "^  ""'  I'  ^^  '^^^^^^^  -"P-- 
resulted  ho^l^Ztl     '         "^  "  "^^  "'^^  "^  ^^  ««>  ^^-e 


REPORT  OF  COMMISSIONER  THELEN. 


83 


XIV. 

Rate  Department. 

Mr.  Hogan  has  charge  of  the  filing  of  schedules  of  rates  of 
charges  in  so  far  as  railway,  express  and  telephone  companies  are 
concerned.  The  Commission  has  not  yet  worked  out  a  form  for  the 
filing  of  the  schedules  of  public  utilities,  and  few.  if  any.  suck 
schedules  are  on  file. 

Up  to  the  present,  the  chief  work  of  Mr.  Hogan  and  his  assistant 
has  been  to  prepare  information  for  the  Commission  in  rate  cases. 
The  Commission's  usual  practice  is  to  take  the  testimony  of  both  Rate  expert 
sides  and  then  to  send  it  over  to  the  rate  expert,  who  reads  it  and  reports  on 
makes  a  report  thereon.  The  Commission  usually  follows  the  report,  ^^^monj^. 
so  that  some  of  the  railway  companies  have  adopted  the  practice  of 
introducing  very  little  evidence  at  all.  for  the  reason  that  they  know 
that  the  Commission  will  investigate  the  subject  anyway.  Mr.  Hogan 
has  had  some  difficulty  in  securing  schedules  of  rates  of  charges 
affecting  Wisconsin  business  issued  by  foreign  companies  not  doing 
business  in  Wisconsin  and  concurred  in  by  the  Wisconsin  lines.  The 
statute  requires  only  the  filing  of  tariffs  issued  by  railroads  which 
are  subject  to  the  act  The  Wisconsin  carriers  have  to  ask  for  an 
extra  copy  of  such  tariffs  for  the  use  of  the  Commission.  Other 
states,  such  as  Oklahoma,  secure  complete  files  of  all  tariffs  affecting 
the  state,  including  those  issued  by  foreign  companies.  They  force 
the  local  companies  to  secure  the  tariffs  from  the  foreign  companies. 
Mr.  Hogan  files  separately  the  tariffs  affecting  state  business  and 
those  showing  nothing  but  interstate  rates.  The  tariffs  are  indexed 
according  to  their  nature,  i.  c.,  commodity,  switching,  distance, 
lumber,  logs.  etc.    A  card  index  system  is  used. 

XV. 
Department  of  Statistics  and  Accounts. 

Section  I  797/n-8  of  the  Public  Utilities  Law  provides  that  every  Uniform 
public  utility  shall  keep  and  render  to  the  Commission,  in  the  manner  accounts  must 
prescribed   by   the   Commission,    uniform   accounts   of   all   business  ^^  kept  b\f 
transacted.     Section   I  797 m-9  provides  that  the  Commission  shall  ^"^''^  ^''^''^• 
prescribe  the  form  of  all  books,    accounts,    papers,    etc     Section 


84 


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REPORT  OF  COMMISSIONER  THELEN. 


85 


I 


1 79 7m- 13  provides  for  an  annual  balance  sheet  to  show  the  informa- 
tion desired  by  the  Commission.  Similar  provisions  are  contained 
in  the  railroad  act 

The  Commission,  acting  under  these  sections,  has  worked  out  a 
set  of  account  forms  and  instructions  for  every  public  utility,  and  in 
some  cases  has  worked  out  different  forms  of  reports  for  the  same 
kind  of  utility,  depending  upon  the  size  and  the  extent  thereof.  These 
forms  have  been  worked  out  with  great  thoroughness  and  care.  A 
complete  set  was  sent  to  the  California  Commission  upon  my  request, 
and  should  be  carefully  consulted  as  soon  as  the  Commission  under- 
takes this  same  work. 

The  Wisconsin  forms  provide  for  an  arrangement  of  operating 
expense  accounts  in  order  of  time,  so  as  to  show  the  cost  as  to  each 
•tep  in  the  process.  The  department  is  also  engaged  in  a  thorough 
classification  of  all  expenses  of  utilities  and  other  facts  connected 
therewith  by  percentages,  so  as  to  arrive  at  unit  information.  Mr. 
Detailed  tables.  Gnihl  showed  me  several  such  tables  worked  out  in  great  detail  for 

some  twelve  gas  companies.  His  department  has  also  worked  out 
tables  of  depreciation  for  each  item  of  utility  plants  and  also  a 
composite  curve  showing  depreciation  for  each  utility.  The  Com- 
mission orders  this  percentage  of  operating  revenues  to  be  set  aside 
for  depreciation  as  prescribed  By  the  Public  UtiHties  Act  This 
department  has  also  done  very  thorough  work  in  the  matter  of 
investigating  passenger  rates  of  the  Milwaukee  street  car  line  system. 
This  case  will  soon  be  decided  and  will  be  one  of  the  most  important 
utility  decisions  of  the  Commission. 

This  department  also  carries  on  a  large  amount  of  general  work 
of  investigation  with  reference  to  the  conduct  of  the  business  of  the 
public  utilities. 

Mr.  Schneider  is  in  charge  of  the  railroad  and  express  statistics 
and  accounting.  The  Wisconsin  Commission  has  adopted  the  form 
of  accounts  prescribed  by  the  Interstate  Commerce  Commission,  but 
itself  prints  the  forms  which  are  sent  out  to  the  railway  companies. 
The  same  is  true  of  express  companies. 


XVI. 

Express  Investigation. 

Commissioner  Erickson   told  me  that  the   Conmiission   has  been 
investigating  express  rates  for  some  eighteen  months.     It  has  secured   Careful 
from  the  express  companies  general  data  showing  amount  of  business   *'n>e5<iga/ion  of 
both  incoming  and  outgoing  from  each  station,   with  the   terminal   ^^^^^^  ''*''" 
expenditures  chargeable  thereto.     Several  hearings  have  already  been 
held.     The  Commission  is  also  going  into  the  question  of  the  reason- 
ableness of  the  rates  of  the  railway  companies  in  connection  with 
this    business.     Mr.    Erickson    was    of    the    opinion    that    Auditor 
Peabody*s  estimates  in  the  Kindel  case  before  the  Interstate  Com- 
merce Commission  are  defective,  because  in  his  original  segregation 
of  freight  from  passenger  expenses  he  loaded  the  passenger  expenses 
too  heavily.     The  Wisconsin  Commission  has  made  a  very  thorough 
examination  into  this  question  of  segregation  of  passenger  from  freight 
operating  expenses.      (See  the  Buell  case.  No.  32.) 

XVII. 
Writing  of  Opinions. 

Conunissioner  Erickson  believes  strongly  in  referring  in  detail  to  Discussion  of 
the  facts  in  the  opinions  of  the  Commission.  He  believes  that  the  detailed  reports, 
habit  of  doing  so  will  induce  the  commissioners  to  make  more 
thorough  investigations  and  also  that  the  railroads  and  utilities  will 
be  less  likely  to  appeal.  This  has  been  the  experience  of  Wisconsin. 
The  case  of  City  of  Beloit  against  the  Beloit  Gas.  Light  and 
Electric  Railway  Company,  decided  while  I  was  in  Madison,  covers 
over  thirty  printed  pages.  Mr.  Erickson  also  showed  me  an  opinion 
which  he  had  written  in  the  matter  of  the  City  of  Janesville  water 
case,  containing  in  detail  by  tables  figures  showing  operation, 
revenue,  classes  of  consumers,  etc..  all  prepared  by  the  statistical 
and  accounting  department.  Mr.  Erickson  realizes  that  some  prom- 
bent  commissioners  prefer  to  write  merely  the  decision  without  going 
into  the  reasons,  but  believes  strongly  that  the  Wisconsin  system  is 
the  better  one. 


86 


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REPORT  OF  COMMISSIONER  THELEN. 


87 


r 


XVIII. 

Cost  Basis. 
Cost  of  Service       Commissioner  Erickson  is  probably  the  leading  exponent  m  the 

inrrn2ZtZ'   ^°'**^  ^^'"   °^  ^^  ^^^^^   »^**   '**««  ^^^'^^^   ^  »>«»«<1   OD   the   COSt 
joi  lute  niaifing.     c  .t  ••ii««  • 

ot  the  service,  mcludmg  mtcrest  on  the  value  of  the  plant  He  has 
prepared  detailed  tables  showing  how  the  cost  of  the  service  of  each 
unit  is  secured. 

XDC 

Relation  Between  State  University  and  Commission. 

One  of  the  most  significant  features  of  the  work  of  the  Railroad 
C/o5e  relations  Conunission  is  the  close  relation  existing  between  the  Commission  and 

betipeen  the  State  University.     Professor  Gihnore.  of  the  law  department. 
Lommtssion  and         ij       .,  -iir.        ri        ......       ,^ 

State  Universit\f.  'f°^*'*°  assistance  m  the  drafting  of  the  ongmal  Railroad  Commis- 
sion Act  Professor  Commons,  of  the  Department  of  Economics, 
drew  the  public  utilities  act  of  1907.  This  work  was  done  without 
compensation  and  on  the  invitation  of  the  legislative  committees.  As 
I  have  already  stated.  Professors  Pence,  Burgess,  Mack,  and  others 
devote  part  of  their  time  to  their  work  in  the  University  and  part  to 
the  work  of  the  Railroad  Commission.  A  large  number  of  the 
employees  of  the  Commission  are  graduates  of  the  State  University. 
Considerable  work  of  an  experimental  nature  has  been  done  by  the 
students  of  the  University.  A  number  of  the  students  of  the  Uni- 
venity  become  interested  in  the  work  of  the  Commission  by  reason 
of  the  lectures  that  are  given  in  the  University  by  men  such  as  the 
professors  whom  I  have  mentioned,  and  they  are  then  upon  gradua- 
tion selected  as  employees  of  the  Commission.  This  relation  is  one 
which  has  grown  up  naturally  and  has  not  resulted  from  any 
forwardness  on  the  part  of  the  Univenity. 

This  relation  is  of  very  great  assistance  both  to  the  University  and 
to  the  Commission.  It  helps  the  University,  because  quite  a  number 
of  her  instructors  are  enabled  to  do  practical  work  and  to  bring  to 
their  classes  the  point  of  view  of  a  practical  man.  The  University 
is  also  very  materially  aided  because  the  people  of  the  state  see 
that  it  is  helping  them  to  solve  some  of  their  most  important  practical 
problems,   and   for   that  reason   give  her  generous   support.      The 


arrangement  is  also  of  very  material  assistance  to  the  Commission. 
It  gives  to  the  Commission  unprejudiced  men  of  scholarliness  and 
thoroughness  and  high  ideals  of  public  service.  I  am  convinced 
that  the  Wisconsin  Commission  could  not  have  attained  its  present 
high  stage  of  efficiency  if  it  had  not  been  for  its  close  association 
with  the  State  University. 


New  York 

SECOND   DISTRICT. 
L 

Introduction. 

The  Public  Service  Commission  both  of  the  First  and  Second 
Districts  were  created  by  statute  of  1907.  They  took  the  place  of 
the  Board  of  Railroad  Commissioners,  the  Commission  of  Gas  and 
Electricity,  the  Inspectors  of  Gas  Meters  and  the  Board  of  Rapid 
Transit  Commissioners.  The  First  District  includes  the  counties  of 
New  York,  Kings,  Queens  and  Richmond;  the  Second  Districts,  all 
other  counties  of  the  state. 

The  Commission  of  the  First  District  has  jurisdiction  over  railroads  J^ns^tction  of 
and  street  railroads  lying  exclusively  within  the  district;  street  ^"*^'^' ^^' ^' 
railroads  lying  partly  within  the  district  in  so  far  as  affects  trans- 
portation of  persons  or  property  within  the  district;  the  portions  of 
other  railroads  lying  within  tfie  district  as  to  physical  features; 
common  carriers  other  than  railroads,  as  to  operations  within  the 
district;  and  gas  and  electric  companies  within  the  district  In 
addition  to  these  powers,  the  Commission  of  the  First  District  is  the 
successor  of  the  Board  of  Rapid  Transit  Commissioners  in  the 
matter  of  rapid  transit  within  the  City  of  New  York  and  the 
management  and  control  of  the  subways.  The  headquarters  of  this 
commission  are  in  New  York  City. 

The  Commission  of  the  Second  District  has  all  jurisdiction  not  Jurisdiction  of 
specifically  conferred  upon  that  of  the  First  District  and  in  addition  ^"'"^^  ^^'  2. 
thereto  the  legislature  of   1910  conferred  upon  it  jurisdiction  over 


1 


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li 


11 


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LOUIS  SLOSS  &  CO. 


all  the  telephone  and  telegraph  companies  of  the  state,  whether 
situated  within  the  First  or  within  the  Second  District  The  head- 
quarters of  this  commission  are  at  Albany. 

The  Public  Utilities  Act  contains  provisions  for  control  over  the 
issue  of  stocks  and  bonds  and  also  of  extensions  and  new  construc- 
tion  (certificates  of  public  convenience  and  necessity). 

The  present  Public  Service  Conmiission  Act  was  very  strongly 
advocated  by  Governor  Hughes  and  was  one  of  his  pet  measures. 

n. 

Organization  and  Office  System. 

Commisstoners  The  Commission, — ^The  commissioners  are  Frank  W.  Stevens. 
appomied.  ^^  chairman,  an  able  lawyer,  who  handles  a  large  part  of  the 
applications  for  approval  of  stock  and  bond  issues;  Martin  S. 
Decker,  formerly  assistant  secretary  of  the  Interstate  G>mmerce 
Commission,  who  handles  a  portion  of  the  applications  and  it 
particularly  concerned  with  traffic  matters;  James  E.  Sague,  who 
was  for  many  years  a  railroad  operating  man  and  who  is  partic- 
ularly interested  in  the  engineering  and  physical  inspection  work  of 
the  Commission;  John  B.  Olmslcad,  a  lawyer,  who  concerns  himself 
with  grade  crossings  and  other  matters,  and  Winfield  A.  Huppuch, 
recently  appointed  by  Governor  Dix.  The  Commission  holds 
hearings  nearly  every  day  and  is  practically  m  continuous  session. 
The  chairman  seems  to  be  a  particularly  hard  working  man.  The 
commissioners  are  appointed  by  the  governor  for  the  term  of  five 
years,  at  a  salary  of  $15,000.00  per  year.  The  New  York 
salaries  are  considerably  higher  than  those  paid  in  any  other  state. 

Departments.       Employees.— The  work  of  the  Commission  is  divided  into  the 
following  divisions: 

a.  Administrative. 

b.  Light,  heat  and  power. 

c.  Statistics. 

d.  Tariffs. 

e.  Engineering  and  inspection. 


REPORT  OF  COMMISSIONER  THELEN. 


89 


/.  Telegraphs  and  telephones. 
g.  Traffic  inspection. 

The  secretary  receives  a  salary  of  $6,000.00  per  year.  The 
present  employees  in  the  administrative  department  are  as  follows: 

John  S.  Kennedy,  secretary;  one  assistant  secretary;  one  secretary 
for  each  commissioner;  and  twenty-three  clerks  and  seventeen  stenog- 
raphers. 

The  Commission  has  a  counsel.  Ledyard  P.  Hale,  who  receives 
a  salary  of  $10,000.00  per  year. 

The  division  of  light,  heat  and  power  has  a  chief  of  division.  Salaries  of 
Henry  C.  Hazzard.  who  receives  a  salary  of  $4,000.00;  one  department 
engineer  at  a  salary  of  $5,000.00;  six  persons  employed  in  the  ^^  ** 
electrical  department;  and  thirteen  in  die  gas  department.  The 
division  of  statistics  consists  of  a  chief  statistician,  who  receives  a 
salary  of  $5,000.00  per  year,  and  fifteen  employees.  The  division 
of  tariffs  consists  of  a  chief  of  division,  at  a  salary  of  $4,000.00, 
and  seven  employees.  The  division  of  engineering  and  inspection 
consists  of  a  chief  of  division,  at  a  salary  of  $4,000.00  per  year,  an 
inspector  and  assistant  inspectors  of  electric  railways,  an  engineer 
and  inspectors  of  grade  crossings,  a  supervisor  of  equipment  and  two 
assistant  supervisors,  a  boiler  inspector,  a  mechanical  engineer,  four 
steam  railway  inspectors  and  several  clerks  and  stenographers.  The 
division  of  telegraphs  and  telephones  has  a  chief,  at  a  salary  of 
$4,000.00.  and  an  engineer  and  seven  employees  in  the  Albany 
office  and  an  engineer  an(i  three  employees  in  the  New  York  City 
office.  The  division  of  traffic  inspection  consists  of  one  inspector, 
whose  station  is  at  Buffalo.  Altogether,  the  commissioners  and  the 
employees  of  the  commission  number  one  hundred  and  thirty.  The 
budget  for  the  year  1911-12.  is  $388,000.  with  an  additional 
$350,000  as  the  state's  share  of  the  cost  of  elimination  of  grade 
crossings. 

Office    Syfstem. — ^All    communications    both    to    and    from    the 
Commission  are  handled  by  the  secretary.     Each  morning  he  goes 
through  the  mail  and  assigns  the  correspondence  to  the  respective 
divisions.     The  files  in  the  general  office  are  arranged  in  three  main  Methods  of 
groups    (1)    formal   matters;    (2)    informal   matters;    (3)    general  ^""^- 


Hi 


90 


LOUIS  SLOSS  h  CO. 


correspondence.  Both  formal  and  informal  matters  are  numbered. 
The  filing  clerk  keeps  in  her  desk  a  book  for  informal  matters  and 
assigns  to  each  matter,  as  it  comes  in.  a  number.  A  decimal  filing 
system  has  been  carefully  worked  out  for  the  general  correspondence 
files.  The  office  has  one  large  general  index.  Formal  matters  are 
indexed  by  name  of  complainant  (on  a  white  card),  name  of  the 
respondent  (salmon),  name  of  the  locality  (blue),  and  the  names 
of  all  persons  who  are  connected  in  any  way  with  the  case,  including 
everybody  who  writes  in  about  it  and  all  lawyers  who  appear,  except 
the  regularly  retained  corporation  lawyers.  In  this  way  an  index 
is  given  to  every  possible  clue.  Informal  matters  are  indexed  in  the 
same  way  on  the  same  colored  cards.  However,  these  matters  have 
two  letters  "cc**  i.  c,  "correspondence  complaints,"  in  the  upper 
right  hand  comer.  All  applications  also  appear  in  this  same  index 
on  green  cards.  General  correspondence  matters  are  indexed  by 
names  of  the  persons.  Separate  indexes  are  also  kept  for  the  subject 
matter  of  all  complaints  both  formal  and  informal.  I  consider  the 
filing  system  of  this  office  to  be  the  best  which  I  observed  in  any  of 
the  commissions,  and  secured  for  the  information  of  the  California 
Commission,  a  copy  of  the  decimal  system  key. 

III. 

Division  of  Heat,  Light  and  Power. 

C(u  and       This  divUion  has  charge  of  the  inspection  of  all  gas  and  electric 

Henry  C.  Hazzard.  Tlie  Commission  has  prescribed  standards  of 
purity  and  of  illuminating  power  of  gas,  and  has  four  men  in  the 
field  constantly  inspecting  gas  plants  to  see  whether  these  standards 
are  being  complied  with.  Examinations  are  also  made  of  the 
safety  of  construction  and  operation  of  high  tension  power  lines. 
About  80  per  cent  of  the  gas  furnished  is  used  for  heating.  C:onse- 
quently.  in  Mr.  Hazzard*s  judgment,  a  calorific  test  is  better  than 
a  lighting  (candle  power)  test  Several  conferences  have  been 
held  between  the  Commission  and  the  gas  companies  for  the  purpose 
of  having  the  companies  adopt  a  calorific  test  The  matter  is  now 
in  process  of  adjustment  Every  gas  meter  is  inspected  before  being 
installed;  this  work  necessitates  the  employment  by  the  Commission 


REPORT  OF  COMMISSIONER  THELEN. 


91 


of  seven  gas  meter  inspectors.  Electric  meters  cannot  be  so  inspected 
before  installation,  for  the  reason  that  because  of  their  delicacy  they 
vary  materially  between  the  time  of  inspection  and  the  time  of 
installation.  After  the  installation  of  the  gas  meters,  they  are  not 
inspected  by  the  Commission  except  upon  complaint  of  a  user  of  gas. 
The  corporation,  however,  is  directed  to  keep  meter  testing  apparatus, 
which  is  inspected  from  time  to  time  by  the  Commission's  inspectors. 
In  Wisconsin,  the  Commission  does  not  in  the  first  instance  test  every 
gas  meter,  but  forces  the  company  to  do  so  within  thirty  days  after 
installation,  and  once  every  two  years  thereafter.  The  New  York 
Commission  also  forces  the  electric  companies  to  purchase  machines 
for  testing  electric  meters  and  to  make  tests  at  regular  intervals. 


IV. 

Division  of  Statistics. 

This  division  is  in  charge  of  Mr.  Wishart.  who  was  formerly  Forms  of 
with  the  Interstate  Commerce  Commission.     The  chief  work  of  the  accounts, 
department  is  to  prescribe  forms  of  accounts  and  reports,  to  analsrze 
the  reports,  and  to  furnish  statistical  data  when  required  by  the 
Commission  in  cases  of  stock  and  bond  issues  and  other  cases.  With 
reference  to  steam  railroads,  the  department  uses  the  Interstate  Com- 
merce Commission's  forms  as  models,  but  prints  its  own  blank  forms, 
with  paper  covers  for  convenience  in  filing.    As  to  express  companies, 
forms  prepared  by  the  Interstate  Commerce  Commission  are  used. 
As  to  gas  and  electric  companies  and  street  railroads,  the  depart- 
ment has  prepared  its  own  forms  for  three  classes  of  companies  in 
each  case,  being  those  which  are  large,  medium  and  small.     The 
department   is   now   preparing    forms   for   telephone   and   telegraph 
companies.     Copies  of  all  these  forms  have  been  sent  to  the  Cali- 
fornia Commission  at  my  request 

The  department  has  two  traveling  auditors  to  examme  the  books  Traveling 
of  public  utility  corporations,  to  make  reports  on  special  cases,  and  auditors, 
to  assist  the  smaller  companies  in  keeping  their  books. 


92 


LOUIS  SLOSS  &  CO. 


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V. 

Division  of  Tariffs. 

Department  This  division  is  in  charge  of  Mr.  Griggs,  who  has  devised  the 
^^oi\aTl^.  most  thorough  tariff  filing  index  system  which  I  observed  on  my 
tour.  The  Commission  has  issued  its  Grcular  No.  55,  being 
regulations  prescribing  the  form  and  governing  the  construction  and 
filing  of  freight  tariffs  and  classifications  and  passenger  fare 
schedules  of  railroad  companies.  It  has  also  prepared  a  form  of 
schedule  for  heat,  light  and  power  companies,  but  this  form  has  not 
as  yet  been  adopted.  Mr.  Griggs  is  now  working  on  a  form  of 
schedule  for  telephone  and  telegraph  companies.  None  of  the 
public  utilities  have  as  yet  filed  any  tariffs.  This  division  issues  a 
weekly  tariff  bulletin  showing  all  changes  in  transportation  rates  and 
fares  for  the  precedmg  week. 

The  largest  part  of  the  work  of  this  division  consists  in  keeping 
up  the  very  thorough  card  index  system  which  Mr.  Griggs  has 
devised.  He  has  one  index  to  tariffs  by  railroads,  showing  passenger, 
class  freight  and  other  tariffs,  except  commodity  tariffs,  and  a  separate 
index  for  all  the  conunodity  tariffs.  The  commodity  index  runs 
alphabetically  from  a  to  z.  each  conmiodity  being  separately  indexed. 
Whenever  a  tariff  schedule  comes  into  the  office  and  is  ready  for 
filing,  every  commodity  shown  therein  is  passed  on  to  the  index  cards. 
For  instance,  under  the  head  of  "apples**  will  be  found  a  reference 
to  every  schedule  which  shows  a  rate  on  apples.  In  this  way.  it  is 
possible  to  tell  at  a  moment's  notice  every  rate  on  apples  in  effect  on 
any  railroad  within  the  State  of  New  York  for  the  last  four  years. 
In  some  cases,  one  single  schedule  necessitates  several  thousand 
notations  on  the  index  cards. 


\ 


1^' 


VI. 

Division  of  Traffic. 

Relief  of       This    division    consists    of    one    inspector    with    headquarters    in 

traffic  Buffalo,  where  the  steam  railroad  traffic  is  more  congested  than  in 

congestion,  ^y  ^^^^  ^^^  -^  ^^  ^^^^    j^  j^  ^^  j^^  ^£  ^^  inspector  to  study 

how  to  relieve  this  congestion  and  to  expedite  traffic. 


REPORT  OF  COMMISSIONER  THELEN. 


93 


VII. 

Division  of  Engineering  and  Inspectjon. 

The  steam  railroad  inspectors  go  over  all  of  the  steam  railroads  Inspection  of 
of  the  state  each  year  and  inspect  the  same  as  to  their  physical  station  facilities. 
features,  such  as  the  adequacy  of  stations  and  yard  facilities  and 
the  condition  of  the  track.  One  supervisor  and  two  assistants  do 
similar  work  with  reference  to  railroad  equipment.  The  inspector 
of  electric  railroads  has  charge  of  the  physical  features  of  the  electric 
railroads  of  the  second  district  and  examines  into  all  complaints 
affecting  them.  The  division  also  has  in  its  employment  a  locomotive 
boiler  inspector  and  an  engineer  and  an  inspector  of  grade  crossings. 

The  railroads  furnish  to  the  Commission,  at  short  intervals,  reports 
as  to  each  passenger  train  delay.  Tlie  engineering  and  inspection 
division  thereupon  analyzes  the  returns  and  suggests  improvements. 


VIII. 
Division  of  Telegraphs  and  Telephones. 

The  statute  of  1910  provides  that  the  Commission  of  the  Second 
District  shall  have  jurisdiction  over  all  telegraph  companies  and  over 
all  telephone  companies  having  a  property  value  of  $10,000.00  or 
over.     Out  of  eleven  hundred  telephone  companies  in  the  state,  only  Eleven  hundred 
one  hundred  and  thirty-five  report  that  they  have  the  required  amount  telephone 
of  property.     The  Commission  is  having  considerable  trouble  with  ^^'"P^"'"* 
telephone  companies  by  reason  of  discriminations  in  charges  arising 
from  existing  contracts.     TTie  Commission  has  called  for  a  statement 
from   the   telephone   companies   as   to  every   discrimination   of   this 
kind,  and  may  take  action  to  order  the  cancellation  of  such  contracts. 
No  investigation  has  been  made  into  the  value  of  the  plants  of  these 
companies  and  no  rates  have  been  fixed  for  any  of  them. 


V 


I 


IX 

Stocks  and  Bonds. 

No  issue  of  stocks,  bonds  or  other  securities  payable  in  •         ^  i :    ^  j 
more  than  twelve  months,  of  any  of  the  companies  subject  approval  of 
to  the  Public  Utilities  Act  is  valid  without  a  certificate  of  Commission, 


^ 


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I  ■ 


94 


LOUIS  SLOSS  &  CO. 


Information 

required  b\f 

Commission. 


Commission 

prescribes 

purpose  for 

Vfhich  proceeds 

ma}f  be  used. 


Discussion  of 
policjf. 


authority  from  the  Commission.  A  very  large  part  of  the 
Commission's  work  consists  in  hearings  on  these  applica- 
tions. Under  the  rules  of  procedure  prescribed  by  the 
Commission,  a  petition  is  filed  setting  forth  the  amount  and 
details  of  the  proposed  issue;  the  purposes  for  which  the 
proceeds  are  to  be  used;  a  general  description  of  property, 
facilities  or  service  to  be  acquired  or  obligations  to  be 
refunded;  the  financial  condition  of  the  applicant;  the  cost 
of  construction  of  the  proposed  improvements;  and  the 
contract  for  the  sale  of  the  stocks  or  bonds,  or  an  affidavit 
as  to  the  amount  probably  to  be  realized.  The  Commission, 
generally  acting  through  Chairman  Stevens  or  Commis- 
sioner Decker,  makes  a  thorough  examination  into  the 
application.  If  there  is  any  question  about  the  matter,  the 
accountants  and  sometimes  the  engineer  of  the  Commission 
are  sent  out  to  examine  the  plant  and  to  report.  The  Texas 
law  as  to  stock  and  bond  issues  of  railroads  provides  that 
no  registration  of  bonds  shall  be  authorized  without  a 
precedent  valuation  of  the  plant.  The  New  York  Commis- 
sion generally  does  not  seem  to  require  a  valuation  as  a 
condition  precedent  to  the  issuance  of  the  certificate. 

The  order  of  the  Commission  generally  prescribes  the 
purpose  for  which  the  money  is  to  be  used,  directs  the 
applicant  to  report  under  oath  the  sales  of  obligations 
issued  and  the  terms  and  conditions  and  amounts  realized 
and  to  make  a  verified  report  at  least  once  every  six  months 
showing  in  detail  the  use  and  application  by  the  applicant 
of  the  moneys  so  realized.  No  form  for  applications  nor 
for  reports  has  been  prepared. 

The  Conunission  lays  very  particular  stress  on  this  part 
of  its  work.  One  very  important  question  which  has  arisen 
is  as  to  whether  or  not  the  Commission  has  the  power, 
under  the  statute,  to  impose  conditions  on  the  grant  of  its 
permission.  Recently  the  Commission  made  an  order  per- 
mitting an  electric  railway  company,  which  was  very  much 
overcapitalized,  to  issue  $500,000.00  worth  of  bonds  to 
make  improvements,  on  condition  that  the  company  strike 
off   $100,000.00   of   its   capital   stock.     The   Commission's 


REPORT  OF  COMMISSIONER  THELEN. 


order  in  this  matter  is  now  in  the  courts.  It  is  important 
to  have  the  statute  provide  that  the  Commission  shall  have 
the  power  to  impose  conditions,  otherwise  it  is  powerless  to 
force  the  writing  off  of  any  watered  stock  or  to  force  com- 
pliance with  any  other  requirement  which,  in  the  judgment 
of  the  Commission,  may  be  necessary  to  protect  the  com- 
pany and  the  public. 


95 


Certificate  of  Pubuc  Convenience  and  Necessity. 

The  railroad  law  and  the  public  service  commission  law  both 
provide  that  the  corporations  therein  specified  shall  not  begin  the 
construction  of  a  new  plant  or  an  extension  of  an  existing  one  or 
exercise  any  new  franchise  or  right  without  having  first  secured  from 
the  Commission  a  certificate  that  public  convenience  and  necessity 
require  the  construction  or  the  extension  or  the  exercise  of  the 
franchise  or  right 

The  applicant  must  file  a  petition  showing  all  the  material  facts 
connected  with  the  enterprise,  including  the  manner  in  which  it  is 
proposed  to  finance  the  construction  or  extension.  The  Commission 
then  gives  notice  to  each  municipality  affected  and  to  every  other 
public  service  corporation  of  the  same  kind  likely  to  be  concerned 
and  to  every  person  who  has  corresponded  in  the  matter,  and  directo 
the  applicant  to  publish  notice  in  a  paper  designated  by  the  Com- 
mission. The  chief  question,  at  the  hearing,  is  generally  as  to 
whether  or  not  the  public  convenience  or  necessity  requires  the 
construction  of  a  new  plant  or  the  extension  of  an  existing  one.  The 
hearings  are  often  contested  between  die  existing  company  and  the 
new  one  which  is  seeking  to  enter  the  field.  Where  the  application 
it  submitted  by  a  proposed  competitor  of  an  existing  utility  and 
the  utili^  already  m  the  field  is  giving  satisfactory  service,  the 
Commission  generally  denies  the  application.  If  die  existing  com- 
pany is  giving  poor  service,  die  Commission  often  holds  the  application 
of  die  new  company  as  a  club  over  die  head  of  die  existing  company 
in  order  to  force  better  service.  The  commissioners  told  me  Uiat 
diey  considered  diis  provision  an  extremely  imporUnt  one.  Cut- 
diroat  competition  between  such  companies  usually  resulte  m  deterio- 


Certificaie  of 

Public 

Necessity, 


Facts  required. 


Competition 
regulated. 


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LOUIS  SLOSS  &  CO. 


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ration  of  the  equipment  and  the  service,  •  and  when  the  inevitable 
consolidation  takes  places,  the  public  must  pay  interest  on  both 
investments. 
A  particular  The  Commission  recently  refused  permission  to  a  proposed  new 
case,  railroad,  the  Buffalo,  Rochester  and  Eastern  to  build  from  Butfalo 
easterly  towards  Boston,  a  proposition  involving  a  contemplated 
outlay  of  more  than  one  hundred  million  dollars.  The  reason  for 
the  refusal  was  that  the  traffic  in  the  territory  affected  was  already 
being  adequately  handled  by  the  existing  railroads  and  that  there 
was  no  reason  for  the  investment  of  so  much  additional  capital  on 
which  the  public  would  have  to  pay  interest.  A  rehearing  was 
granted  in  the  case,  but  a  decision  affirming  the  former  decision 
was  being  prepared  when  I  was  with  the  Commission,  although  a 
large  number  of  legislators  had  signed  a  petition  to  the  Commission 
**to  decide  the  case  promptly  and  in  favor  of  the  applicant**  and 
though  there  was  considerable  public  agitation  in  favor  of  the 
project. 


:!  I 


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Utile  progress 

in  physical 

valuation. 


Reduction  of 
telephone  tolls. 


Theories  of 

physical 

Valuation 

discussed. 


XI. 

Physical  Valuation. 

This  Commission  has  done  practically  no  work  in  ascertaining 
the  value  of  the  properties  of  the  corporations  subject  to  its  jurisdic- 
tion. The  only  work  which  has  been  done  has  consisted  in  the 
valuation  of  a  few  of  the  smaller  utilities  in  complaints  before  the 
Commission  concerning  their  rates.  In  the  New  York  telephone 
case,  recently  decided,  concerning  ten  cent  tolls  between  New  York 
City  and  adjoining  cities,  the  Commission  reduced  the  toll  to  five 
cents.  The  Commission  struck  out  an  item  of  thirty  million  dollars 
for  special  franchise  values,  and  then  took  the  telephone  company's 
own  figures  as  to  value.  One  valuation  was  made  during  the  last 
four  years  in  the  matter  of  a  gas  rate.  One  of  the  commissionen 
told  me  that  there  was  little  occasbn  for  investigating  railroad  rates 
for  the  reason  that  they  were  stable  and  that  the  railroads  were 
entitled,  if  anything,  to  a  higher  rate  than  those  in  effect 

Chairman  Stevens,  speaking  for  himself,  is  not  impressed  by  the 
physical  valuation  theory  of  some  of  the  western  states.  He  thinks 
such  valuations  unsatisfactory  for  three  reasons: 


REPORT  OF  COMMISSIONER  THELEN. 


97 


1.  Because  the  principles  upon  which  they  are  based  have  not 
as  yet  been  clearly  defined  by  the  courts. 

2.  Because  the   ascertainment  of   the  valuation  is  largely   guess 
worL 

3.  Because  he  does  not  know  what  to  do  with  the  valuation  after 
he  gets  it 

As  bearing  on  the  second  point,  he  referred  to  a  Buffalo  gas  or 
electric  case,  in  which  he  had  been  taking  testimony  for  some  two 
weeks  and  in  which  the  experts  varied  two  hundred  per  cent  in  Experts  difer, 
their  valuations.  He  is  of  the  opinion  that  this  entire  question  of 
physical  valuation  is  largely  guess  work,  particularly  with  reference 
to  depreciation.  In  his  judgment,  the  original  cost  of  the  plant 
(not  the  cost  of  reproduction)  is  a  material  element,  but  he  points 
out  that  in  New  York  State  it  is  absolutely  impossible  to  ascertain 
the  original  cost  of  construction  of  the  railroad  properties.  He  stated 
also  that  the  application  of  the  cost  of  reproduction  theory  would 
very  materially  raise  the  railroad  rates  in  the  State  of  New  York. 


XII. 
Rate  Fixing. 

At  I  have  already  indicated,  the  New  York  Conunission  has  done   Perfect  service 
practically  no  work  in  the  way  of  rate  fixing.  In  1 907  the  legislature   vs.  rate 
passed   a   two   cent   maximum    fare   passenger   law,   but   Governor   '^«g"'a''on. 
Hughes   vetoed   the   bill   on   the   ground   that   there   had   been   no 
investigation  sufficient  to  justify  the  reduction.     The  Public  Service 
Commission  did  not  at  that  time  have  the  power  to  investigate  rates 
on  its  own  initiative.     No  investigation  has  ever  been  made.     Mr. 
Stevens*  view  of  the  matter  is  that  the  service  should  first  be  perfected, 
and  that  when  this  has  been  done,  the  Commission  can  take  up  the 
question  as  to  whether  or  not  the  company  is  still  receiving  excessive 
compensation.     The  Commission  has  never  made  any  investigation  of 
express  rates. 


it 

I 


»ij 


98 


LOUIS  SLOSS  &  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


99 


XIII. 
Relation  With  Newspapers. 

The   Commission   is  very  particular  to   sec  to   it  that  adequate 
Full  publicit}f  publicity  is  given  to  its  proceedings.    Each  day  the  assistant  secretary 
to  work  of  prepares  a  statement  of  the  matters  which  have  come  before  the 
Commission.  Commission  during  the  day.  including  decisions  and  new  applications 
for  the   approval  of  stock  or  bond  issues   and   for  permission   to 
construct  new  plants  or  extensions  of  existing  plants.     These  state- 
ments are  secured  each  day  by  the  newspaper  representatives  and 
are  published  in  a  large  number  of  the  papers  in  the  state.     While 
I  was  traveling  m  other  states,  both  in  the  east  and  south,  I  read, 
from   time   to   time,    in   the   local   papers,    items   which   had   been 
telegraphed  over  the  wires  of  the  Associated  Press  from  the  Com- 
mission of  the  Second  District  of  New  York,  showing  the  effectivenew 
of  the  newspaper  work  of  the  Commission. 

XIV. 

Relation  Between  Commission  and  Corporations. 

Commission  and  This  Conmiission.  like  that  of  Wisconsin,  seems  to  be  on  friendly 
corporations  terms  with  the  corporations  subject  to  iu  jurisdiction.  I  was  told 
friendlyf.  that  there  are  at  present  only  three  or  four  cases  m  the  courts 
arising  out  of  orders  of  the  Commission,  these  being  cases  raising 
questions  concerning  the  jurisdiction  of  the  Commission  in  certain 
matters,  such  as  the  power  to  impose  conditions  upon  the  issue  of 
stocks  and  bonds. 

This  condition  of  affairs,  existing  as  it  does  with  reference  to  the 
work  of  two  of  the  most  thorough  and  capable  of  the  Commissions 
of  the  country,  would  seem  to  justify  the  conclusion  that  where  the 
work  of  Commissions  is  done  with  considerable  care  and  thoroughness, 
the  probability  of  appeal  from  their  orders  is  slight  The  result 
has  been  that  the  entire  legal  work  of  the  Commission  is  handled 
by  its  counsel,  personally,  without  any  assistanU.  It  is  interesting 
in  this  connection  to  note  that  the  legal  department  of  the  Commis- 
sion of  the  First  District  in  New  York  consists  of  a  Counsel  and 
some  four  or  five  assistants,  who  are  kept  constantly  busy  with  the 
Commission's  litigation.      It  is  only  fair,  however,  to  say  that  a 


large  portion  of  the  litigation  of  the  Commission  of  the  First  District 
is  probably  due  to  a  mean  spirit  on  the  part  of  some  of  the  corpora- 
tions, and  to  the  fact  that  former  watering  of  stock  and  excessive 
issues  of  bonds  have  placed  the  corporations  now  in  such  a  position 
that  they  cannot  meet  the  interest  on  their  bonds  and  declare 
dividends,  and  consequently  are  not  in  a  mood  to  comply  with  any 
order  requiring  an  additional  outlay  of  money. 

XV. 

Elimination  of  Grade  Crossings. 

The  Railroad  Commission  Law  of  1907  contains  elaborate  Attempts  to 
provisions  concerning  the  power  of  the  Conmiission  with  reference  abolish  grade 
to  supervision  of  crossings,  and  particularly  the  abolition  of  grade  ^''ossmgs. 
crossings.  In  the  years  1907  to  1910  the  State  of  New  York  paid 
as  its  share  in  the  elimination  of  grade  crossings,  the  sum  of 
$1,270,831.49.  The  final  determination  by  the  Commission  of  a 
large  number  of  grade  crossing  cases  has  been  held  up  because  of 
the  failure  of  the  legislature  of  1909  to  make  any  appropriation  for 
the  further  elimination  of  such  crossings.  The  legislature  of  1911, 
however,  appropriated  $350,000  for  this  worL  In  the  three 
years  from  1907  to  1910.  inclusive.  226  persons  were  killed  and 
400  injured  at  highway  crossings  in  New  York  State  outside  the 
limits  of  New  York  City.  The  Commission  has  reconunended  that 
a  statute  be  passed  requiring  the  railway  companies  to  remove,  at 
their  own  expense,  each  year  one  grade  crossing  for  every  three 
hundred  miles  of  railroad.  The  problem  is  becoming  more  serious 
every  day. 

XVI. 

Discounts  and  EIxpenses. 

The    Conmiission    has    taken    the    position    that    discounts    and  Discussion  of 
expenses  incurred  in  connection  with  the  original  sale  of  securities  methods  of 
are  not  to  be  regarded  as  capital  on  which  interest  must  be  paid  ^rite-off 
mdefinitely.    but    rather    that    they    are    amounts    which    must    l^  of  discounts. 
apportioned  annually  over  the  period  of  life  of  the  security.     In 
other  words,   these  sums  should  be  paid  out  of  income  and  not 


100 


LOUIS  SLOSS  &  CO. 


% 


regarded  as  capital  account.  This  matter  is  of  importance,  in  view 
of  the  fact  that  the  Washington  Commission,  in  making  its  valua- 
lions,  permitted  the  railroads  to  capitalize  these  items. 

XVII. 
Amortization  Fund. 

amorikaihn  ^*  Commission  insists  that  the  companies  shall  set  aside  each 
fund  left^h  ^^^  ^"*  °^  ^^^  income  an  amortization  fund.  While  it  would 
corporations,  »"**"'ally  he  expected  that  the  corporations  would  be  glad  to  do  so. 
the  fact  is  that  many  of  their  managers,  desiring  to  declare  as  large 
a  dividend  as  possible,  have  been  extremely  dilatory  about  setting 
aside  this  fund.  The  Commission  has  prescribed  no  percentage  of 
depreciation  to  be  set  aside,  but  has  left  the  responsibility  for  the 
present  with  the  corporations  themselves. 


Massachusetts 


RAILROAD  COMMISSION. 


Introduction. 

The  Board  of  Railroad  Commissioners  of  Massachusetts  was 
.....  apparently  created  by  act  of  1 864.  although  its  active  work  seems 
Junsdicbon.  to  date  from  the  act  of  1869.  The  Board  has  limited  jurisdiction 
over  all  steam,  electric,  and  street  railroads,  express  companies 
and  "steamship  companies  serving  as  common  carriers  throughout 
the  year  between  two  or  more  ports"  of  the  commonwealth. 
Jurisdiction  over  gas  and  electric  light  companies  is  exercised  by 
the  Gas  and  Electric  Light  Commissioners.  Jurisdiction  over 
telephone  and  telegraph  companies  is  exercised  by  the  Board  of 
Highway  Commissioners. 

The     General     Court     (legislature)     of     MassachusetU     meets 


REPORT  OF  COMMISSIONER  THELEN. 


101 


annually  and  each  year  passes  quite  a  number  of  amendments  to 
the  railroad  commission  act.  and  resolves  (resolutions)  calling  upon 
the  Board  to  investigate  special  problems  and  to  report  thereon. 


II. 

Organization  and  Office  System. 

The  Commission. — The  commissioners  are  Walter  P.  Hall.  Commissioners 
Chairman ;  Geo.  W.  Bishop  and  Clinton  White.  Mr.  Hall  is  a  appointed. 
lawyer.  All  the  chairmen  from  Chas.  Francis  Adams  down  have 
been  lawyers.  Mr.  Bishop  was  formerly  road  master  of  the 
Fitchburg  railroad  and  is  the  practical  railroad  man  of  the 
Commission.  Mr.  White  has  served  for  ten  years,  is  a  banker  and 
financier  and  handles  the  stock  and  bond  applications.  The 
commissioners  give  practically  all  their  time  to  the  duties  of  their 
office.  They  spend  considerable  time  in  traveling  both  in  the 
United  States  and  abroad  for  the  purpose  of  familiarizing  them- 
selves with  traffic  conditions  and  with  the  most  approved  methods 
of  railroad  operation. 

Tlie  railroad  commissioners  are  appointed  by  the  governor  and 
serve  for  three  years.  By  amendment  of  1906.  the  salary  of  the 
chairman  was  raised  to  $6,000.00  and  that  of  the  other  two 
commissioners  to  $3,000.00. 

Employees. — ^The  employees  of  the  Board  consist  of  a  secretary, 
an  assistant  secretary,  an  auditor,  an  assistant  auditor,  a  consulting 
engineer,  ten  inspectors  and  four  stenographers.  The  secretary.  Duties  of 
Chas.  E.  Mann,  is  appointed  by  the  governor,  at  a  salary  of  employees, 
$3,000.00  per  year,  and  has  served  since  1893.  The  only  other 
secretary  whom  the  Commission  has  had  served  from  1869  to 
1893.  The  function  of  the  accountant  and  his  assistant  is  to  edit, 
check  over,  analyze  and  digest  the  reports  submitted  each  year  by 
the  railroad  companies.  The  consulting  bridge  engineer.  Professor 
George  F.  Swain  of  the  Harvard  Scientific  School,  receives  a 
salary  of  $3,000.00.     The  inspectors  are  paid  $2,000.00. 

Tlie     total     expense     for    salaries     for     the    year     1910    was  Salaries. 
$42,600.00.     The  sums  of  money  appropriated  annually  by  the 
General   Court   for   salaries  and  expenses  of  the  board,   its  clerks 


r 


V 


102 


LOUIS  SLOSS  &  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


103 


i 


In 


' 


and  employees,  are  apportioned  by  the  tax  commissioner  among 
the  corporations  subject  to  the  jurisdiction  of  board,  in  proportion 
to  gross  earnings,  and  are  collected  in  the  same  manner  as  taxes 
upon  such  corporations,  so  that  the  entire  expense  of  maintaining 
the  board  is  ultimately  paid  by  the  corporations  which  are  subject 
to  its  jurisdiction. 

Ojjicc  5jwtem. — The  office  system  is  not  elaborate,  for  the  reason 
that  the  Board  does  not  handle  a  very  large  amount  of  business. 
Records  of  ^11  formal  matters  arc  numbered  and  a  brief  history  thereof 
written  in  an  mdex  book.  I  glanced  through  this  book  and  noted 
that  practically  all  matters  noted  therein  are  petitions  by  the 
railway  companies  for  approval  of  locations,  approval  of  stock 
and  bond  issues,  approval  of  right  to  exercise  franchises,  etc.  On 
a  number  of  these  pages  I  noticed  only  a  single  case  of  a  complaint 
by  the  third  party  asking  a  hearing.  Matters  which  are  referred 
to  the  Board  by  the  General  Court  for  investigation  are  also  noted 
as  formal  matters.  An  index  is  kept  of  all  correspondence  matters. 
A  book  containing  an  entry  of  every  letter  received  and  sent  out 
m  each  such  matter  is  also  kept.  The  secretary  keeps  a  card  index 
of  all  applications  by  railroads.  He  keeps  letterpress  books  for 
his  correspondence  and  also  one  for  "Orders  of  Notice,**  these 
being  notices  to  corporations  that  matters  have  been  set  for  certain 
dates.  The  blank  forms  of  these  orders  are  printed  in  copying 
ink  so  that  the  entire  notice  appears  in  the  letterpress  book. 

The  minutes  are  kept  in  a  loose  leaf  book  with  typewritten  inserts. 
On  the  theory  that  the  Board  is  in  session  all  the  time,  no  mention  is 
made  of  adjournments  to  any  particular  time.  The  minute  books 
show  proceedings  on  an  average  of  about  every  other  day. 

III. 

Rate   FixiNa 

Up  to   1911,   the  Board  had,   with   reference   to  rates,   recom- 

^ommtss' ^ner  s  mcndatory  powers  only.     For  that  reason,  the  Board  was  referred 

5".'*       '  to    by    a    committee    of    the    National    Association    of    Railroad 

recommending  Commissioners  as  a  weak  board.      It  is  evident  that  this  charge 

changes  of  rates,  rankles.     TTie  commissioners  explained  that  although  they  did  not 

have  the  power  to  fix  a  rate,   they  accomplished  practically  the 


same  purpose  through  their  powers  of  recommendation,  for  the 
reason  that  if  their  recommendations  were  not  complied  with,  the 
General  Court  would  pass  a  statute  m  the  matter,  lowering  the 
rate.  I  have  been  informed  within  the  last  few  days,  however, 
that  the  General  Court  before  adjourning  this  spring  finally  gave 
to  the  Commission  the  power  to  fix  rates. 

In  response  to  a  resolve  of  the  General  Court,  the  Board  has 
made  a  thorough  investigation  into  the  commutation  rales  within 
fifteen  miles  of  Boston  and  has  secured  the  adoption  by  the  rail- 
roads of  twelve  day  tickets  and  has  also  induced  them  to  smooth 
out  all  inequalities  in  rates  in  concentric  spheres  of  territory  radiating 
out  from  Boston.  Under  a  resolve  of  191 1,  the  Board  must  now 
investigate  commutation  rates  further  out  than  fifteen  miles.  Com- 
missioner White  told  me  that  there  is  a  considerable  agitation  for 
the  reduction  of  commutation  fares  further  out,  particularly  on 
electric  roads,  and  that  the  promise  of  a  reduction  in  such  fares 
is  frequently  the  principal  plank  m  the  platform  of  a  candidate  for 
fikt  General  Court 

IV. 

Facilities,  Equipment,  Safety  Devices. 

With  reference  to  repairs,  additions  to  rolling  stock,  additions  to  Commission  ma}f 
or  alterations  in  sUtions  or  waiting  rooms,  and  manner  of  operation,  recommend 
the    powers   of     the     Board    are   recommendatory    only.      Certain  ^^-^n^i^^^ 
statutes,  however,  have  given  to  the  Board  the  power  to  compel 
the  installation  of  interlocking  plants,  signal  plants  at  crossings  and 
safety  devices.     In  general,  the  Board  has  mandatory  power  as  to 
matters  affecting  the  safety  of  passengers  and  merely  recommendatory 
power  in  the  general  field  of  service,  safely  and  equipment 

V. 


Powers  of  Board  as  to  Charters,  Finances  and 

Construction. 


V 


Certificate 
required  from 
Commission 
The  most  important  powers  of  the  Board  are  those  which  are  y^fore  a  railroad 

exercised  in  the  granting  of  certificates  as  preliminary  to  the  incor-  compan])  ma^  be 
poration  of  railroad  companies  and  their  construction  and  financial  incorporated. 
operations. 


104 


LOUIS  SLOSS  &  CO. 


.'i! 


I 


Incorporation. — ^Aftcr  the  incorporators  of  a  proposed   railroad 

company    have    signed    articles   of   intended    association    and   have 

Certificate  of  advertised  the  same,  they  must  secure  from  the  Board  a  certificate 

P"    '^  that  public  convenience  and  necessity  require  the  construction  of  a 

convenience,      .11  11  •  .         ,  ,^      -^       , 

railroad   as  proposed   m   the   articles   of   agreement.      The   Board 

has  power  to  refuse  the  issue  of  such  a  certificate.  The  Board  in 
its  order  sets  a  date  for  the  hearing  of  the  matter  and  usually 
directs  publication  in  at  least  one  newspaper  in  each  city  or  town 
atfected,  and  also  directs  a  copy  of  the  publication  to  be  served 
Discussion  of  on  the  mayor  of  each  such  city  or  town.  Railroads  which  might 
poicp.  ^  affected  are  also  notified.  The  general  policy  of  the  Board  is 
to  grant  such  certificates  wherever  they  affect  new  territory  but  to 
refuse  them  where  the  territory  is  already  adequately  served.  In 
case  the  existing  service  is  inadequate,  and  the  existing  company 
is  slow  to  improve  it.  Commissioners  Hall  and  While  differ  as  to 
the  policy  to  be  pursued.  Chairman  Hall  would  grant  the 
application  on  the  ground  that  competition  is  a  good  thing.  Com- 
missioner White  would  hold  the  matter  in  abeyance,  using  it  as  a 
club  over  the  head  of  the  existing  corporation  to  compel  improved 
service,  and  ultimately  granting  it  only  if  the  existing  corporation 
does  not  come  up  to  scratch.  Chairman  Hall  fears  that  this  policy 
will  ultimately  result  in  the  refusal  of  any  new  corporation  to 
apply,  and  consequently  a  tendency  on  the  part  of  the  existing 
corporation  not  to  keep  up  its  service. 

The  Board  last  year  refused  several  applications  for  new 
railroads,  among  them  the  application  of  the  Boston,  Lowell  and 
Lawrence  Electric  Railroad  Company,  in  which  case  Chairman 
Hall  dissented.  The  Board  last  year  granted  certificates  to  four 
railroads,  refused  them  to  two  (Hall  dissenting)  and  postponed 
one  matter   (Hall   dissenting). 


Procedure. 


If  the  Board  issues  the  certificate  of  public  convenience  and 
necessity,  the  proposed  corporation  must  then  agree  as  to  its  route 
with  the  board  of  aldermen  of  all  the  cities  and  towns  through 
which  the  railroad  is  to  run,  must  pay  into  its  treasury  ten  per  cent 
of  the  par  value  of  the  slock  subscribed,  and  must  then  secure  from 
the  Board  a  certificate  of  compliance  with  the  provisions  prelim- 
inary to  incorporation.     Then,  and  only  then,  can  the  incorporators 


REPORT  OF  COMMISSIONER  THELEN. 


105 


secure  from  the  secretary  of  the  commonwealth  their  certificate  of 

incorporation. 

As  far  as  I  was  able  to  ascertain,  Massachusetts  is  the  only 
state  which  makes  the  issuance  of  a  certificate  of  public  convenience 
a  condition  precedent  to  the  issuance  of  articles  of  incorporation. 
In  Wisconsin  and  New  York,  the  proposed  company  can  incor- 
porate and  secure  its  articles,  subject  to  the  possibility  that  the 
Railroad  Commission  may  thereafter  refuse  permission  to  build  the 
railroad  for  which  they  are  incorporated.  The  Massachusetts  plan 
is  more  logical  in  that  it  goes  to  the  root  of  the  matter  and  prevents 
the  initial  incorporation  of  such  company,  unless  the  Board  of 
Railroad  Commissioners  decides  that  public  convenience  and  necessity 
require  the  construction  of  a  railroad  along  the  route  specified  in  the 
articles  of  incorporation. 

Constuction. — ^After  the  certificate  of  incorporation  has  issued 
and  the  railroad  has  been  constructed,  it  can  not  be  operated  until 
the  Board  has  issued  its  certificate  that  all  laws  regarding  its 
construction  have  been  complied  with  and  that  it  appears  to  be 
in  a  safe  condition  for  operation.  If  the  railroad  thereafter  wishes 
to  extend  its  line  or  to  add  a  new  piece  of  track,  it  must  secure 
from  the  Board  an  approval  as  to  location.  With  reference  to 
locations,  the  Board  has  power  to  refuse  the  certificate  only  on 
the  ground  of  menace  to  public  safety.  The  right  of  the  railroad 
to  build  along  a  certain  route  has  already  been  settled  by  the 
issuance  of  the  certificate  of  public  convenience  and  necessity.  The 
question  arising  under  an  application  for  the  approval  of  a  location 
is  simply  the  determination  of  a  specific  location  in  that  general 

route. 

If  tfie  railroad  thereafter  wishes  to  lease  the  franchise  of  another 
railroad  corporation,  or  to  consolidate  with  such  corporation,  or  to 
enter  into  a  contract  with  it  under  which  the  corporation  shall 
perform  all  the  transportation  upon  the  road  of  the  other,  it  must 
first  secure  a  certificate  of  authorization  from  the  Board  of  Railroad 
Commissioners. 

Finances.— If  a  railroad  wishes  to  issue  stocks,  bonds, 
notes  or  other  evidences  of  indebtedness,  payable  more 
than  twelve  months  from  the  date  of  issue,  it  must  first 


Certificate  of 
Commission 
required  after 
construction 
before  beginning 
operation. 


Leases,  mergers 
under  control  of 
Commission. 


Issues  of 
securities  must  be 
approved  b\f 
Commission. 


Hi 
H 

% 


I; 


106 


LOUIS  SL0S3  ac  CO. 


i 


h* 


I 


Commissioners 

prefer  general 

powers  rather 

than  detailed 

statutory^ 

provisions. 


Discussion. 


secure  a  certificate  from  the  Board  of  Railroad  Commis- 
sioners. No  form  of  petition  has  been  prescribed  by  the 
Board.  The  Board  generally  directs  notice  to  be  published 
in  one  or  more  newspapers.  Cases  of  contest  in  matters 
of  this  kind  are  extremely  rare.  There  is  generally  an 
appearance  made  by  the  attorney  and  the  treasurer  or 
auditor  of  the  applicant.  The  Board  does  not  seem  to 
make  the  careful  examination  into  the  value  of  the  appli- 
cant's property  which  is  made  in  New  York  and  Texas, 
but  seems  to  rely  largely  upon  the  knowledge  of  finance 
possessed  by  Commissioner  White. 

The  statute  does  not  specify  the  purpose  for  which  such 
issues  can  be  made  and  m  this  respect  differs  from  the 
statutes  of  New  York  and  Wisconsin.  Commissioner 
White  told  me  that  the  present  Board  has  never  authorized 
an  issue  for  any  purpose  other  than  the  purchase  of  prop- 
erty except  under  one  statute  which  authorized  the  issue 
for  working  capital.  Mr.  White  thinks  it  wiser  to  have 
the  statute  give  the  Board  general  powers  in  this  respect 
instead  of  tying  the  hands  of  the  commissioners  by  detailed 
statutory  provisions. 

I  had  some  little  conversation  with  Commissioners  Hall 
and  White  with  reference  to  the  policy  of  the  commissions 
in  New  York  in  forcing  an  applicant  at  times  to  write  off 
a  designated  amount  of  capital  stock  as  a  condition  prece- 
dent to  the  approval  of  a  new  issue  of  stocks  or  bonds  so 
as  gradually  to  squeeze  out  the  water.  Chairman  Hall  is 
strongly  of  the  opinion  that  the  Commission  should  not 
go  into  these  matters,  but  should  start  with  a  clean  slate 
and  should  consider  only  whether  the  amount  of  the  issue 
applied  for  is  too  large  for  the  purpose  specified  and 
whether  the  purpose  specified  is  legitimate.  He  referred 
to  the  converse  case  in  which  the  corporate  plant  is  worth 
more  than  its  stocks  and  bonds  and  asked  why  it  would 
not  be  permissible  in  such  a  case,  if  the  theory  referred  to 
is  correct,  to  permit  a  new  issue  of  stocks  or  bonds  without 
putting  in  any  new  money  into  the  plant.  He  does  not  see 
how  the  New  York  Commissions  can  consistently  refuse 


REPORT  OF  COMMISSIONER  THELEN. 


107 


to  grant  such  permission  in  the  latter  case.  I  found  no 
crystalization  of  opinion  among  the  conunissions  on  this 
point. 

These  provisions  with  reference  to  incorporation,  con- 
struction, and  finances  give  to  the  Board  immense  powers, 
and  the  larger  portion  of  its  work  is  performed  under  them. 
The  stock  and  bond  law  has  been  in  effect  since  1875,  and 
the  public  convenience  and  necessity  law  since  1882.  Wis- 
consin, New  York  and  other  states  which  have  recently 
adopted  similar  provisions,  all  apparently  took  them  from 
Massachusetts. 

VI. 
Grade   Crossings. 

The  matter  of  alteration  or  abolition  of  grade  crossings  is  an 
extremely   important   one   in   Massachusetts.      In    1910,    the   Com- 
mission approved  plans  for  the  abolition  of  crossings  at  grade  in  Abolishment  of 
eight  towns  and   also   approved   two   agreements   for   alterations   in  ^''^"^  crossings, 
grade  crossings.     In  cases  of  abolition,  the  railway  companies  pay 
65  per  cent  of  the  expense,  and  the  state  and  the  city  or  town  ^o^'  divided. 
33    per    cent      $34,000,000    has    already    been    expended    in 
Massachusetts  by  the  railroad  and  public  authorities  in  the  abolition 
of  grade  crossings.     In  1910,  the  commonwealth  voted  an  additional 
$500,000  for  this  purpose.      Both  Chairman  Hall  and  Commis- 
sioner White  urged  strongly  that  California  take  steps  in  this  matter 
at  once,  before  the  expense  becomes  enormous,  as  is  the  case  in  all 
the  eastern  states. 


\ 


VII. 
Court    Procedure. 

The  Board  has  had  almost  no  cases  in  court.  This  is  partly  due 
to  the  fact  that  a  large  portion  of  the  work  of  the  Board  has  been  ^*'"^«  litigation. 
recommendatory  and  that  none  of  it  has  involved  the  fixing  of  a  rate. 
The  remedy  adopted,  whenever  any  was  used,  has  been  certiorari. 
The  Board  has  been  reversed  only  four  times  in  its  history.  Two 
of  these  cases  date  back  to  the  days  of  Charles  Francis  Adams. 


108 


LOUIS  SLOSS  «c  CO. 


ti 


hJ 


VIII. 
Preparing  Annual  Report. 

Secretary  Mann  showed  me  his  method  of  preparing  his  annual 
Method  of  report.      During  the  year,   the  usual   main  heads  in   a   report  are 

mnullrl^^orh  ^"*  ^*  *"^  *"  ^'^*"  *°^  ^^'  ™*"*"  pertaining  thereto  are 
'  pasted  under  these  heads  in  chronological  order,  ready  for  printing. 
TTie  index  heads  are  also  cut  out  and  pasted  on  cards,  and  new 
cards  are  prepared  by  one  of  the  clerks  at  odd  times  as  new 
headings  become  necessary.  All  orders  in  so  far  as  possible,  are 
held  off  after  December  15  th,  and  the  Chairman's  report  must 
be  in  by  that  day.  Proof  has  been  read  in  the  meantime,  from 
time  to  time,  by  the  secretary,  with  the  result  that  the  signed  report 
is  on  the  desk  of  the  legislators  by  the  first  Wednesday  in  January. 
The  statistical  reports  are  printed  in  a  separate  volume.  By 
planning  the  work  ahead  during  the  year,  it  is  comparatively  easy 
to  have  the  report  prepared  in  time. 


IX. 
Library. 

Interesting  Secretary  Mann  has  spent  considerable  time  in  securing  a  library, 
hbraryf  of  particularly  in  so  far  as  the  railroads  of  Massachusetts  are  con- 
cerned. He  has  collected  a  large  number  of  pamphlets  dealing 
with  the  early  history  of  these  railroads,  and  practically  all  the 
books  that  have  been  published  affecting  in  any  way  the  railroads 
of  the  commonwealth.  He  showed  me  some  extremely  interesting 
pamphlets  going  back  to  the  very  first  railroad  construction  in 
Massachusetts,  and  others  dealing  with  the  early  history  and 
construction  of  the  Hoosac  Tunnel.  He  has  also  secured  from 
the    railroads    and    from   booksellers   and    private    libraries    almost 

complete  sets  of  the  stockholders*  reports  of  the  railroad  companies 

a  matter  of  considerable  importance  to  an  effective  railroad  com- 
mission. He  has  also  prepared  a  historical  card  index  of  all  the 
railroads  of  Massachusetts,  showing  in  detail  every  step  in  their 
history,  beginning  with  the  incorporation  and  continuing  through 
every  organization,  reorganization  and  consolidation,  and  every  statute 
and  order  of  the  Board  referring  in  any  way  to  these  matters  and 


REPORT  OF  COMMISSIONER  THELEN. 


to  the  issuing  of  stocks  and  bonds.  I  shall  go  into  this  latter 
matter  a  little  more  fully  in  connection  with  the  work  of  the 
Public  Service  Commission  of  the  First  District  of  New  York. 
These  two  commissions  seem  to  be  the  only  ones  which  have 
realized  fully  the  immense  value  of  having  in  the  office  of  the 
state  board  detailed  and  accurate  information  concerning  the  entire 
history  of  the  railroad  companies  of  the  state. 


109 


Inspectors. 

Up  to  1911,  the  legislature  provided  for  seven  inspectors.  The 
state  was  divided  into  six  districts,  with  one  inspector  in  charge 
of  each  district  The  duty  of  each  inspector  is  to  look  into  the 
service,  equipment,  and  facilities  of  the  steam  and  street  railroads  Duties  of 
within  his  district  and  to  investigate  complaints  affecting  these  matters.  Inspectors. 
The  seventh  inspector  is  a  locomotive  inspector  and  spends  his  time 
riding  on  locomotives.  Commissioner  White  is  particularly  proud 
of  these  inspectors.  All  of  them  are  practical  railroad  men.  Each 
Monday  they  report  to  Commissioner  Bishop  at  a  general  confer- 
ence. There  is  sufficient  diversity  in  their  qualifications  so  that  one 
or  Ae  other  is  qualified  to  handle  practically  any  matter  which 
may  come  up,  however  technical  it  may  be.  involving  a  question 
of  service,  facilities,  or  equipment  The  legislature  of  1911 
increased  the  number  of  the  inspectors  from  seven  to  ten. 

B. 

GAS  AND  ELECTRIC  COMMISSIONERS. 

L 

Introduction. 

Smce  1885,  jurisdiction  over  all  the  gas  and  electric  light 
companies  of  the  state  has  been  exercised  by  the  Board  of  Gas 
and  Electric  Light  Commissioners. 


I 


The  Board  has  the  following  general  powers: 

1.     To  supervise  all  companies  manufacturing  and  selling  gas 
or  electricity  for  light  or  heat 


Ceneral  pothers. 


I 


110 


LOUIS  SLOSS  &  CO. 


5. 
6. 

7. 


2.  To  authorize  a  gas  light  company  to  engage  in  the  business 
of  furnishing  electricity  for  heat  and  power. 

3.  To  sit  as  court  of  appeal  on  decisions  of  boards  of  alder- 
men or  selectmen  on  the  petition  of  a  second  company  to  lay  gas 
pipes  in  the  streets. 

4.  To  exercise  similar  power  as  to  electric  light  companies. 

To  prescribe  forms  of  accounts. 

To  compel  the  rendition  of  annual  returns. 

To     compel  a  company  to  supply  gas  or  electricity  upon 
the  petition  of  a  consumer. 

8.  To  fix  the  quality  and  price  of  gas  or  electricity  upon 
petition  of  the  mayor  of  a  town  or  the  board  of  selectmen  or 
twenty  consumers. 

9.  To  fix  the  price  of  gas  or  electricity  upon  petition  of  the 
company. 

10.     To  test  electric  meters  on  petition  of  a  consumer, 
ff.     To  mvestigate  accidents. 

12.  To  test  and  seal  all  gas  meters  before  installation. 

13.  To    test    all    gas    for    candle    power    and    for    sulphur, 
ammonia,  and  other  impurities. 

14.  To  enforce  provisions  of  a  recent  statute  as  to  smoke  m 
Boston,  Brookline,  Cambridge,  and  other  cities. 

15.  To  regulate  all  issues  of  stocks  and  bonds  and  all  consol- 
idations of  gas  and  electrical  companies. 

II. 

Organization  and  Office  System. 

The  Commission  consists  of  Forrest  E.  Barker,  Chairman,  Morris 

Schatf,   and  Alonzo   R.   Weed.      Chairman   Barker  is   a   lawyer 

and  has  served  on  the  Board  since  the  seventies.      Mr.   Weed  is 

Commissioners  an  engineer,  a  graduate  of  West  Point  and  has  just  been  reap- 

appoinied,  pointed     for    the   ninth   or   tenth   time.      The    Conmiissioners    are 


'( 


REPORT  OF  COMMISSIONER  THELEN. 


Ill 


appointed  by  the  Governor  at  a  salary  of  $5,000.00  for  die 
Chairman  and  $4,500.00  for  the  other  two  Commissioners.  The 
Conmiissioners  devote  their  entire  time  to  the  duties  of  the  office 
and  seem  to  perform  a  very  large  amount  of  work.  Their  report 
is  among  the  most  thorough  and  comprehensive  of  any  of  the 
reports  published  by  state  commissions. 

Emplo}fees. — ^The  employees  consist  of  a  clerk  appointed  by  the  Duties  of 
Governor,  one  chief  and  two  assistant  gas  inspectors,  four  inspectors  employees, 
or  testers  of  meters,  one  electrical  inspector  and  three  stenographers. 
All   the  salaries  and   expenses   are  paid  by  the  gas  and  electric 
companies  in  proportion  to  their  gross  receipts. 

Office  System. — Stenographic  reports  are  taken  of  all  hearings  Complete 
and  the  original  notes  are  firmly  bound  in  black  leather  volumes  records  k^pL 
which  are  then  filed  away  in  the  vault.  This  is  an  excellent  idea, 
apparently  original  with  this  board  and  worthy  of  emulation.  The 
annual  reports  of  the  corporations  are  neatly  bound  when  returned, 
those  of  private  gas  companies  in  one  color,  those  of  private  electric 
companies  in  another  and  those  of  municipally  owned  plants  in  still 
another  color. 


I 


III. 
Rate  FixiNa 

Chairman   Barker  pointed  out   that  the   Board   does   not  have  Rate  complaints 
power  on  its  own  initiative  to  fix  rates.     He  said  that  his  Board  must  originate 
had   discouraged   legislation   to   that  end,   for  the   reason   that   the  T^ith  public, 
public  would  then  be  inclined  to  lose  their  initiative  in  the  matter 
of  filing  complaints  and  for  the  reason  that  the  Board  would  then 
be  subject  to  severe  criticism  for  failure  to  institute  investigations 
in  certain  cases.     He  pointed  out,  however,  that  when  a  reduction 
m  rates  is  petitioned  for  by  the  Mayor  or  the  Board  of  Selectmen 
or  twenty  consumers,  the  Board  has  the  power  to  fix  the  rate.     On 
other  occasions  the  Board  at  times  compels  the  reduction  of  a  rate 
as  a  condition  to  the  approval  of  a  stock  or  bond  issue. 


I 


U' 


112 


LOUIS  SLOSS  &  CO. 


Examples  of 

conditions 

imposed  b}f 

Commission, 


Commission 

determines  price 

for  ivhich 

bonds  ma^  be 

sold. 


IV. 

Stocks.    Bonds,   Consolidation. 

There  is  hardly  ever  any  opposition  in  cases  of  this  kind. 
The  Board  hears  the  evidence  presented  and  then  itself 
goes  carefully  into  the  value  of  the  plant  and  the  financial 
condition  of  the  company  before  issuing  its  certificate.  In 
the  year  1910,  twenty-nine  applications  for  approval  of 
issue  of  stocks  and  bonds  were  decided.  The  amount  of 
security  asked  for  was  $3,803»400,  and  the  amount  approved 
$2,969,600.  The  Board  at  times  imposes  conditions  to  its 
permission;  for  instance,  that  a  certain  amount  of  the 
capital  stock  should  be  written  off,  or  a  dividend  reduced 
or  an  assessment  made  to  bring  up  the  capital  account. 
The  policy  of  this  Board,  as  well  as  the  experience  of  the 
New  York  Commissions  of  both  districts,  shows  the 
necessity  of  giving  to  the  Commission  the  power  to  impose 
conditions  on  the  approval  of  stock  and  bond  issues. 

The  Massachusetts  Board  has  the  power,  on  granting 
applications  for  issues  of  bonds,  and  it  is  its  duty,  to 
determine  the  price  for  which  the  bonds  shall  be  sold.  This 
is  an  unpleasant  duty  and  nobody  is  ever  satisfied  with  the 
decision  of  the  Board  on  this  question. 

V. 

New  Gas  or  Electric  Plants. 


Sections  25  and  26  of  the  statute  provide  that  no  gas  or  electric 

Public  Utilities  company  shall  use  the  streets  of  a  city  or  town  without  the  consent 

must  obtam  ©f   the  mayor   or   aldermen   or   selectmen   granted   after   notice   by 

permission  0  publication  and  a  formal  hearing.     Section  27  provides  that  any 

use  streets,  •ii.ii'*  •i«i"         i  i 

person   aggrieved   by   the   decision   may   withm   thirty   days   appeal 

to   the   Board   of   Gas   and   Electric   Light   Commissioners,   whose 

decision   shall   be   final.      Chairman   Barker   told   me   that  appeals 

were  taken  in  practically   all  cases  and  that  in  only  one  or   two 

cases  had  the  Board  permitted  the  second  utility  to  come  into  the 

field.     While  his  Board  has  not  put  itself  on  record  as  formulating 

any  definite  policy  in  this  matter,  these  results  speak  for  themselves. 


REPORT  OF  COMMISSIONER  THELEN. 


113 


I  rcfened  to  objections  which  I  had  heard  concerning  this  policy 
as    applied    to    railroads,    whereupon    Chairman    Barker    answered 
that  there  is  no  remedy  so  sure  or  so  speedy  to  secure  adequate 
service  by  the  existing  company  as  the  power  of  the  Board  to  grant  ^J^^^^f^ '"^'^ 
or  withhold  a  certificate  to  a  second  company.  llTJlltion  of 

In  answer  to  the  suggestions  that  such  a  course  of  procedure  ^^^^^^.^^„^ 
might  soon  dissuade  new  companies  from  making  further  applica- 
tions. Mr.  Barker  said  that  it  is  always  easy  to  stir  up  an  agitation 
for  a  citizens*  or  other  new  gas  or  electric  company  if  the  service 
of  the  existing  company  becomes  too  poor. 

VI. 

Accounts. 

The  Board  has  prepared  a  carefully  worked  out  form  of  accounts 
and  reports,  which  aims  at  simplicity,  so  that  the  matters  presented 
shall  help  the  public  ascertain  the  simple  question  as  to  whether 
the  company  is  or  is  not  making  too  large  a  profit  This  commw- 
sion  has  done  the  pioneer  work  of  the  country  in  the  matter  of  the  .    ,    ^. 

prescription   of   forms   of   accounts   for   gas  or   electric   companies   ZZunL 
When  the  California  Commission  secures  jurisdiction  over  gas  and 
electric  companies,  it  will  do  well  to  examine  carefully  the  forms 
prescribed    by    the    Massachusetts    board,    copies    of    which    were 
sent  to  the  California  Commission  at  my  request. 

VII. 

Litigation. 
In  all  its  history,  this  Board  has  had  only  a  single  case  in  court.  Uttle  litigation 


BOARD    OF    HIGHWAY    COMMISSIONERS. 

This  Board,  among  other  powers,  has  jurisdiction  over  all  tele- 
graph and  telephone  companies  within  the  state.  I  was  unable  to 
visit  the  Board. 


114 


LOUIS  SLOSS  &  CO. 


Fii 


fu 


I.I 


New  York. 

FIRST  DISTRICT. 
L 

Introduction. 

The  extent  of  this  Commission's  jurisdiction  has  already  been 
discussed  while  considering  the  Commission  of  the  second  district. 
Commission  As  there  slated,  its  office  is  in  New  York  City.  The  largest  portion 
C(mtolsjubw^^  ^f  ^^  ^^^^  ^f  ^^  Commission  of  the  first  district  arises  from  its 
iransit  ^^^^^^  ®^«'  subways  and  rapid  transit,  as  the  successor  of  the 
Board  of  Rapid  Transit  Commissioners  of  New  York  City.  Out 
of  489  employees  of  the  Commission  in  June,  1911,  272  were 
directly  and  solely  concerned  with  this  branch  of  the  work.  Two- 
thirds  of  the  running  expenses  of  the  Commission,  irrespective  of  the 
cost  of  the  construction  of  subways,  are  directly  chargeable  to  this 
branch  of  the  work.  The  Commission  has  but  little  to  do  with 
steam  surface  railways.  Such  of  these  railroads  as  have  their 
terminus  in  New  York  City  keep  up  adequate  service  and  facilities 
without  any  action  on  the  part  of  the  Commission.  The  extent 
of  these  railroads  within  the  city  of  New  York  is  so  small  that 
no  questions  affecting  the  rates  within  the  city  of  New  York  have 
arisen.  Apart  from  its  subway  work,  the  attention  of  the  Com- 
mission is  directed  largely  to  street  railways  and  to  gas  and  electric 
plants  within  the  city  of  New  York. 

n. 

Organization  and  Office  System. 

Personnel  of  The  Commission.— The  Commissioners  are  William  R.  WUlcox, 
Lommtsston.  chairman.  Milo  R.  Maltbie.  John  E.  Eustis.  Wm.  McCarroU  and  J. 
Sergeant  Cram.  Chairman  Willcox  was  practising  law  at  the  time  of  his 
appointment  by  Governor  Hughes.  Mr.  Maltbie  is  a  Ph.D.  of 
Columbia  University,  a  thorough  student  of  political  economy  and 
a  hard  worker.  He  does  most  of  the  public  writing  for  the  Com- 
mission and  also  works  out  and  writes  a  large  portion  of  the  opinions 
of  the  Commission.      He  and  Commissioner   Bassett,   whose   term 


REPORT  OF  COMMISSIONER  THELEN. 


115 


Salaries  of 
Commissioners, 

Bureaus, 


recently  expired,  did  most  of  the  work  in  connection  with  stock 
and  bond  issues.  Mr.  Eustis  is  a  lawyer.  Mr.  McCarroll  was 
formerly  a  leather  merchant  Mr.  Cram  was  recently  appointed  by 
Governor  Dix  in  place  of  Commissioner  Bassett,  who  was  regarded 
as  an  extremely  efficient  commissioner. 

As  is  the  case  in  the  second  district,  the  commissioners  of  Ae 
first  district  are  appointed  by  the  Governor  and  devote  their  entire 
time  to  the  worL    Their  salary  is  likewise  $15,000  a  year. 

The  Ofice, — ^The  office  is  divided  into  the  following  bureaus: 

(a)  Executive. 

(h)  Chief  Engineer. 

(c)  Transportation  engineer. 

{d)  Gas  and  electricity. 

(e)  Franchises. 

(/)  Statistics  and  accounts. 

(a)  Exccufivc.— The  secretary,  Travis  H.  Whitney,  is  a 
member  of  the  class  of  1900  at  Harvard  and  of  1903  at  the 
Harvard  Law  School.  He  has  the  work  of  the  office  exceptionally 
well  in  hand,  and  directs,  with  considerable  ability,  the  administra- 
tive work  of  the  Commission.  The  executive  office  apart  from  the  Executive  ofices, 
secretary,  consists  of  the  counsel  and  his  office,  and  of  sixty-four 
employees,  of  whom  thirty-two  are  clerb,  and  sixteen  stenographers. 
Among  the  other  employees,  are  two  assistant  secretaries,  one 
librarian,  one  purchasing  agent  and  one  photographer. 

(fc)      Chief  Engineer. — ^The  attention  of  the  chief  engineer  and 
his  department  is  confined  entirely   to  subway  construction  work.  Control  of 

The  chief  engineer  has  an  office  force  and  an  engineer  of  subway     _^^,^^..  „ 

,         ,  .....  J  J*  •  •       construction 

construction,   under  whom   arc   six  divisions   and   a   sewer  division  ^^^^ 

and  a  division  of  design.     There  are  two  hundred  and  seventy-one 

men  directly  under  the  chief  engineer. 

(c)  Transportation  Engineer, — ^The  transportation  engineer,  in 
addition  to  his  office  force,  has  divisions  of  transit  inspection,  equip- 
ment inspection  and  accidents  and  complaints.  The  division  of 
transit  inspection  employs   forty-three  persons,   including  thirty-two 


I 


><(■ 


i 


h 


116 


LOUIS  SLOSS  &  CO. 


inspectors  and  six  or  eight  assistant  engineers.  The  division  of 
equipment  inspection  consists  of  ten  railway  engineers,  five  electrical 
engineers  and  one  inspector.  The  division  of  accidents  and  com- 
plaints consists  of  one  assistant  electrical  engineer  and  five  inspectors. 

(J)  Cas  and  Electricity. — ^The  gas  and  electricity  bureau 
consists  of  thirty-three  employees,  among  whom  are  one  secretary, 
six  inspectors  and  twenty-three  gas  meter  testers. 

(e)  Franchise  Bureau. — ^The  franchise  bureau  consists  of  the 
chief  of  bureau  and  ten  employees. 

(/)  Division  of  Statistics  and  Accounts. — ^This  division  con- 
sists of  the  chief  statistician  and  seventeen  employees,  including  five 
statisticians  and  six  accountants  and  six  stenographers  and  clerks. 
Budget.  T^c  budget  is  about  $1,000,000  a  year.  The  state  of  New 
York  pays  the  salaries  of  the  Commissioners,  the  counsel  and  the 
secretary  and  the  city  of  New  York  pays  the  other  expenses.  The 
city  bears  its  share  of  the  expenses  by  means  of  short  term  notes 
which  are  placed  in  the  next  year's  city  budget  as  a  part  of  the 
city's  indebtedness.  For  printing  alone,  apart  from  the  subway 
and  rapid  transit  work,  the  Commission  last  year  spent  over 
$35,000.00. 

Oj^cc  S}fstem. — ^The  secretary  is  the  administrative  head  of  the 
Secretary^  is  Commission.  I  observed  the  number  of  men  coming  into  his  office 
administrative  during  the  two  days  I  was  there  and  can  bear  witness  to  the  very 
head.  \gjgi^  number  of  persons  whom  he  sees  during  the  day.  These 
are  partly  members  of  the  office  force  coming  to  him  for  their 
instructions  and  rendering  reports  to  him,  partly  representatives  of 
the  press  and  partly  third  parties.  The  secretary  handles  all  the 
mail.  A  stenographer  opens  the  mail  early  in  the  morning  and 
writes  on  a  tag,  in  duplicate,  the  general  nature  of  the  letter,  with 
a  reference  to  the  person  who  wrote  it  An  assistant  secretary 
then  stamps  on  the  tag  a  reference  to  the  person  or  department  to 
whom  the  letter  is  to  go.  When  the  secretary  arrives  in  the  office, 
he  glances  over  the  letters  and  tags,  and  the  letters  are  then  dis- 
tributed. One  of  the  duplicate  tags  goes  with  the  letter  and  the 
other  is  kept  in  the  secretary's  office  and  filed,  so  that  he  can 
determine  at  once  to  whom  the  letter  was  assigned.     When   the 


JJ 


REPORT  OF  COMMISSIONER  THELEN. 


117 


letter  is  returned  with  its  answer,  the  second  tag  is  taken  off  and 
filed  with  the  first.  The  secretary  personally  signs  all  letters  which 
go  out,  except  those  of  the  legal  and  engineering  departments.  The 
secretary  also  prepares  carefully  the  work  to  be  taken  up  by  the 
Commission  at  its  meetings. 

III. 

Legal  Department. 

The  legal  department  is  headed  by  James  S.  Coleman,  counsel 
for  the  Commission,  who  receives  a  salary  of  $10,000.00  per  year. 
His  office  force  consists  of  five  assistant  counsel,  two  junior  assistant 
counsel,  a  secretary  to  counsel,  four  stenographers  and  four  clerks. 
One  assistant  counsel  draws  all  the  orders  in  stock  and  bond  cases 
and  similar  matters,  besides  taking  care  of  legislation  affecting  the 
Commission.  Another  counsel  and  two  assistants  handle  the  Com- 
mission's rapid  transit  and  subway  work.  Another  assistant  counsel 
has  charge  of  matters  arising  out  of  the  railroad  law,  such  as  grade 
crossings,  service  and  the  like. 

This  Commission  seems  to  have  more  legal  work  than  any  other  Much  litigation. 
railroad  or  public  service  commission  in  the  United  States.  This 
condition  arises  partly  from  the  large  number  of  contracts  and 
agreements  which  must  be  prepared  in  connection  with  the  Com- 
mission's subway  work,  and  partly  from  the  fact  that  this  Commission 
seems  to  have  more  litigation  than  any  similar  commission.  The 
large  amount  of  this  litigation  seems  to  be  due  to  three  causes:  Causes. 

1.  Unfavorable  judges. 

2.  Antagonistic  corporations. 

3.  Action  on  the  part  of  the  Commission  in  exercising  powers 
which  the  courts  later  hold  are  not  conferred  by  the  act 

Writ  of  RevietP. — The  original  intention  of  Governor  Hughes 
and  the  framers  of  the  statute  was  that  there  should  be  no  appeal 
or  review  of  an  order  of  the  Commission,  the  complainant  being  left 
to  his  remedy  by  injunction.  The  state  courts,  however,  held  that  Legislation, 
the  remedy  of  review  prescribed  by  the  code  of  civil  procedure 
would  lie.     The  Commissioners  are  strongly  opposed  to  the  right 


118 


LOUIS  SLOSS  &  CO. 


i 


1^ 


of  review  and  are  apparently  preparing  to  amend  the  statute  so 
as  to  take  away  this  right,  as  soon  as  they  can  secure  a  favorable 
legislature.  One  of  the  assistant  counsel  showed  me  the  transcript 
in  the  Third  Avenue  case.  The  printed  volumes  of  the  transcript 
are  at  least  two  feet  higji.  The  corporations,  in  presenting  their 
cases,  put  in  every  conceivable  kind  of  testimony,  and  the  G>m' 
mission  itself  includes  the  voluminous  reports  and  records  which  it 
may  have  considered  in  arriving  at  the  decision. 

Mr.  Coleman  strongly  favors  the  right  of  review  and  points  out 
that  trial  by  injunction  would  take  much  longer  and  would  be  far 
more  cumbersome  than  review.  He  might  also  have  pointed  out 
that  in  the  absence  of  the  right  of  review  m  the  state  courts  there 
it  nothing  to  prevent  a  corporation  from  going  at  once  to  the  federal 
courts  for  an  injunction,  freed  from  any  condition  which  the  legisla- 
ture may  prescribe  for  such  cases  in  the  state  courts. 

Attitude  of  Liligalion. — ^The  New  York  state  judges  have  on  every  possible 
Courts,  occasion  whitded  down  the  powers  of  the  Commission.  The  lower 
federal  judges  seem  also  to  be  unfavorably  inclined.  The  famous 
Consolidated  Gas  case,  which  was  finally  decided  in  favor  of  the 
Commission  in  the  United  States  Supreme  Court,  was  decided 
adversely  to  the  Commission  in  every  inferior  court.  The  following 
are  some  of  the  leading  cases  affecting  the  powers  of  the  Commission : 

Particular  cases.   »•     IVillcox  vs.  Consolidated  Cas  Compan}^^  212  U,  S,  40. 

In  this  case,   the  Supreme  Court  of  the  United  States  finally 
sustained  a  statute  fixing  the  price  of  gas  at  80  cents. 

b.     Long  Acre  Electric  Light  and  Poiper  Company  Case. 

In  this  case,  the  Commission,  on  general  grounds  of  public  policy, 
refused  authority  for  the  issue  of  stocks  and  bonds  of  the  newly 
formed  Long  Acre  Electric  Light  and  Power  Company.  The 
Conmiission  regarded  the  matter  as  simply  an  effort  on  the  part 
of  the  applicant  to  secure  the  desired  permission  so  that  it  might 
then  be  in  a  position  to  force  a  sale  to  the  Consolidated  Gas 
Company.  The  courts  reversed  the  order  of  the  Commission,  deny- 
ing  the  desired  authority,  and  the  Commission  thereupon  on  July  28, 
1911,  while  I  was  visiting  them,  finally  granted  the  desired 
certificate. 


REPORT  OF  COMMISSIONER  THELEN.  119 

c.  South  Shore  Traction  Company^  Case. 

This  was  an  application  to  build  an  electric  railway  from  Queens 
County  over  the  Queensborough  Bridge  into  Manhattan.  The 
Commission  found  that  public  convenience  and  necessity  would  be 
subserved  by  the  construction  of  the  contemplated  railway,  but  held 
that  the  franchise  granted  by  the  city  of  New  York  did  not 
sufficiently  protect  the  city  because  it  did  not  provide  sufficiently 
for  the  use  of  the  bridge  by  possible  later  companies.  The  court 
overruled  the  Commission,  on  the  ground  that  die  Commission's 
power  as  to  franchises  was  merely  a  perfunctory  power  of  approval, 
without  the  right  to  impose  conditions  or  qualifications. 

d.  The  Third  Avenue  Railroad  Case, 

This  was  a  case  of  reorganization.  The  Commission  refused  to 
authorize  the  issue  of  some  $73,000,000  of  stocks  and  bonds,  on 
the  ground  that  the  real  value  of  the  plant  was  not  over 
$38,000,000.  The  court  held  that  under  a  proper  construction 
of  the  language  of  the  statute  as  to  reorganization,  the  companies 
had  the  full  power  to  issue  up  to  the  combined  stocks  and  bonds 
of  the  component  companies  and  that  the  Commission  had  no  power 
to  impose  any  condition  which  would  lower  this  total,  even  for 
the  purpose  of  squeezing  out  water.  These  people  applied  twice  to 
die  Commission  and  were  twice  refused.  The  decision  of  the 
appellate  division  overruling  the  Commission  was  handed  down  on 
June  21,  1911.     The  Commission  intends  to  appeal  the  case. 

IV. 

Stocks  and  Bonds. 

Apparently  the  most  important  work  of  the  Commission,  Security^  issues 
apart  from  its  subway  and  rapid  transit  work,  is  that  in  must  have 
connection  with  applications  for  approval  of  stock  and  bond  ^^^?[.^^ 
issues.    The  rules  of  procedure  in  these  matters  are  similar 
to  those  of  the  second  district  already  referred  to.     The 
Commission  makes  a  very  thorough  investigation  in  each 
case,   and,   as   a   part   of   its   inquiry,   at   times   makes   a 
physical  valuation  of  the  plant.      There   is   considerable 
question,  as  a  matter  of  law,  whether  the  Commission  has 


Commission. 


120 


LOUIS  SLOSS  &  CO. 


hf 


'*/ 


been   granted    the   power    to   impose    conditions    on    the 

granting  of  the  desired  permission.    The  Commission  acts 

on  the  theory  that  it  has  this  right,  and  often  imposes 

A  t^ical  order,  quite  a  number  of  conditions.    A  typical  order  was  issued 

on  July  28,  1911,  in  the  matter  of  the  application  of  the 
Long  Acre  Electric  Light  and  Power  Company  for 
authority  to  issue  $10,000,000  of  preferred  stock  and 
$50,000,000  of  bonds  to  be  secured  by  mortgage  on  its 
property.  The  Commission's  order  authorized  an  issue  of 
$2,000,000  of  capital  stock  and  of  $50,000,000  of  bonds,  of 
which  bonds,  however,  only  $4,000,000  may  at  present  be 
issued.  After  specifying  the  purpose  for  which  the  money 
may  be  used,  the  order  sets  out  the  following  conditions: 

Condiiiom      1.     No  bond  shall  issue  imtil  the  existing  mortgage  has 
of  order,  been  satisfied. 

2.  $2,000,000  of  bonds  may  issue  only  when  $1,000,000 
of  new  stock  has  been  fully  paid  in.  The  same  condition 
governs  the  second  $2,000,000  of  bonds.  The  bonds  may 
not  be  sold  at  less  than  90  per  cent  of  par,  and  the  proceeds 
must  be  applied  as  specifically  directed. 

3.  If  the  company  proposes  to  sell  the  bonds  for  less 
than  90  per  cent  of  par,  it  must  publish  notice  of  the  sale 
and  permit  a  public  bidding  under  the  control  of  the 
Public  Service  Conmiission. 

4.  Discounts,  commissions  and  expenses  shall  not 
exceed  $400,000  and  shall  be  amortized  out  of  the  income 
of  the  company  before  July  1,  1961. 

5.  The  company  must  keep  full  accounts  of  receipts 
and  applications  of  proceeds  of  sales  and  make  each  month 
a  verified  report  of  the  same  to  the  Commission. 

6.  No  proceeds  shall  be  spent  until  an  itemized  bill 
therefor  has  been  submitted  to  the  Commission. 

7.  Stocks  and  bonds,  under  this  authority,  must  issue 
prior  to  July  1,  1913. 


I 


REPORT  OF  COMMISSIONER  THELEN. 


121 


8.    A  duplicate  original  of  the  mortgage  must  be  filed 
with  the  secretary  of  the  Commission. 

Commissioner  Maltbie  states  that  in  his  judgment  the  J^*;;^^^^^^^^^ 
present  law  concerning  applications  for  approval  of  stock  ^^^^^  ^^  ^^^ 
and  bond  issues  is  satisfactory,  except  that  the   statute  j^^^^ 
should  clearly  confer  upon  the  Commission  the  power  to 
prescribe   conditions   on  the   issue    of   stocks   and   bonds, 
should    make    the    power    of    the    Commission    apply    to 
reorganizations,   and   should  provide,   in   addition   to   its 
present  provisions,  that   notes  of  a  corporation   running 
for  less  than  a  year  can  not  in  turn  be  replaced  by  other 

""^The  street  railway  conditions  in  New  York  City  show  5ecun|^«  o/  Nem 
very  clearly  the  necessity  of  public  control  over  the  issue  ^Jl^^^  ^ 
of  stocks  and  bonds.    Although   New  York   City  is  the  p^^p^^^^^ 
richest  passenger  traffic   territory   in  the   country,   every 
street  railway  company  in  that  city  is  in  the  hands  of  a 
receiver.  The  reason  is  that  every  time  any  of  the  extremely 
numerous    organizations    and    reorganizations    in    street 
railway  properties  were   effected,   the  amount  of  capital 
stock  was  increased  and  the  issue  of  bonds  was  augmented. 
The  result  is  that  today  these  companies  are  vainly  trying 
to  pay  interest  on  a  tremendous  amount  of  watered  capital 
and  excessive  bond  issues.     It  further  foUows  that  the 
companies    have    no    money    for    the   betterment   of    the 
service  or  for  the  purchase  of  necessary  additional  equip- 
ment   or    facilities.      The    investing    public    has    suffered 
because  of  excessive  capitalization,  and  the  traveling  public 
because    of    inability    to    improve    service,    facilities    and 
equipment.    If  at  the  time  these  organizations  and  reorgan- 
izations  started,   an  efficient   state   commission   had    had 
control  of  stock  and  bond  issues,  the  present  condition  of 
affairs  would  never  have  resulted. 

^-  Certificate  of 

Certificates  of  Public  Convenience  and  Necessity      ^^"^^^^^^^^^ 

Section  53  of  the  Public  Service  Commission  law.  referring  to   hegiming 
railroads,  street  railroads  and  common  carriers,  and  similar  sections  construction. 


122 


LOUIS  SLOSS  &  CO. 


applicable  to  gas  and  electric  companies  and  telegraph  and  telephone 
companies,  provide  that  no  company  shall  begin  the  construction  of 
its  plant  without  first  securing  from  the  Public  Service  Commission 
a  certificate  of  public  convenience  and  necessity.  Dr.  Wilcox  told 
me  that  the  public  service  field  had  already  been  so  thoroughly 
covered  in  New  York  City  that  very  few  applications  have  been 
made  or  will  be  made  for  certificates  of  public  convenience  and 
necessity.  No  such  application  has  been  made  with  reference  to 
gas  and  electric  companies.  Apparendy  no  case  has  arisen  as  to 
railway  companies  except  the  South  Shore  Traction  Company  case, 
supra,  in  which  case.  Commissioner  Bassett  specifically  found  that 
public  convenience  and  necessity  existed  but  refused  a  certificate 
because  of  disapproval  of  certain  provisions  of  the  franchise  granted 
by  the  city. 

VI. 

Approval  of  Franchises. 

The  secdons  referred  to  in  section  V  hereof  further  provide  that 

Commissioner  the  corporations  therein  specified  shall  not  exercise  any  franchise  or 

must  approve  right  not  theretofore  lawfully  exercised  without  having  first  secured 

before  franchises  the  permission  and  approval  of  the  proper  Commission.    The  statute 

r^rf^p/  contains  similar  provisions  with  reference  to  the  transfer  of  franchises 

or  stock.     In  the  South  Shore  Traction  Company  case,  the  court 

held  that  the  Commission  does  not  have  the  right  to  refuse  approval 

to  the  exercise  of  a  franchise,  except  in  so  far  as  the  public  safety 

is  affected.     If  this  is  the  law,  the  statutory  power  in  this  respect 

is  at  present  largely  ineffective. 

VIL 

Franchise  Bureau. 

The  Commission  of  the  first  district  is  the  only  commission  in  die 
country  which  has  a  special  franchise  bureau.  The  head  of  the 
bureau  is  Dr.  Delos  F.  Wilcox,  a  Ph.D.  of  Columbia,  author  of 
''Municipal  Franchises**  and  a  number  of  pamphlets  and  magazine 
articles,  and  an  unusually  well  posted  man.  Dr.  Wilcox  has  made 
a    thorough    study    of    all    the    organizations    and    reorganizations. 


REPORT  OF  COMMISSIONER  THELEN. 


123 


exercised. 


mergers  and  consolidations,  affecting  the  public  service  corporations 
of  this  district  and  of  all  the  franchises  which  have  been  granted 
Id  them.  He  furnished  the  material  from  which  Commissioner 
Maltbie  published  a  two  hundred  and  thirty  page  book  on  "Fran- 
chises of  Electrical  Corporations  in  Greater  New  York,"  accom- 
panied by  an  illuminative  chart 

ReporU  and  documents  from  companies, — ^This  bureau  secured 
from  each  company  subject  to  the  jurisdiction  of  the  Commission  a 
certified  copy  of  each  document  affecting  its  organization,  reorgan-  Statistical  data. 
izations,  consolidations,  mergers,  etc.,  and  of  every  deed,  franchise, 
lease  or  agreement  and  all  miscellaneous  documents   affecting  its 
corporate  existence.     The  bureau  has  secured  a  very  large  number 
of  these  documents  and  has  filed  them  by  companies,  each  document 
in  a  separate  file  with  a  number.     A  card  index  is  ananged  by 
origmal   companies.      As   to   each   such   company,    the   index  has 
subheads  for  certificate  of  incorporation,  franchises,  leases,  operating 
agreements,  etc.     Maps  secured  from  the  companies  in  connection 
with  their  franchises  are  also  indexed  but  separately  filed. 

Franchise  hooks.—Dr.  Wilcox  s  office  has  prepared  blue  printe 
showing  the  history  of  every  franchise  that  has  been  granted  witfiin 
the  limits  of  the  city  of  New  York.  Each  map  shows  some 
franchise  or  franchises,  trackage  actually  used  and  trackage  owned 
and  trackage  operated  under  lease,  with  appropriate  references. 
Along  the  edges  of  the  print.  Dr.  Wilcox  has  written  historical  data 
showing  the  history  of  each  franchise.  These  maps  follow  each 
other  in  chronological  order  and  are  pasted  into  four  large  scrap 
books,  one  book  for  each  borough. 

Historv  charts,— Dr,  Wilcox  has  also  prepared  charts  showing 
diagrammatically  the  history  of  each  company  performing  a  certain 
kind  of  service,  with  the  original  organization  and  all  successive 
organizations,  reorganizations,  mergers,  consolidations,  receiverships. 
etc.,  including  the  stock  owned  in  other  corporations.  These  charts  Franchise 
show  as  to  each  kind  of  public  service,  a  large  number  of  original  charts. 
companies  gradually  merging  into  one  or  two  which  now  control  the 
situation.     Copies  both  of  franchises  and  history  charts  in  so  far 


I 


ffi 


124 


LOUIS  SLOSS  &  CO. 


as  they  affect  electrical  corporations  will  be  found  in  the  book  of 
"Franchises  of  Electrical  Corporations  in  Greater  New  York," 
above  referred  to. 

Value  of  franchise  compilations. — The  franchise  compilations  so 
prepared  are  of  great  assistance  to  the  Commission  in  the  matter 
Franchise  of  the  approval  of  stock  and  bond  issues  and  may  also  be  used  as 
records,  ^^  hasis  for  actions  to  forfeit  a  considerable  number  of  unused 
franchises.  This  data  also  shows  that  in  some  cases  the  public 
service  corporations  are  using  the  streets  of  the  city  of  New  York 
without  any  franchise  at  all. 

There  is  no  statutory  provision  in  New  York  for  an  indeterminate 
franchise,  similar  to  that  of  Wisconsin,  except  in  the  Rapid  Transit 
Act,  affecting  the  subways  and  the  rapid  transit  system  of  New 
York  City. 

VIII. 

Physical  Valuation. 

Tlie  Commission  has  made  no  physical  valuations  except  in 
connection  with  a  few  matters  of  approval  of  stock  and  bond  issues. 

IX. 

Newspapers. 

PubUctfylPork  Xhe  relationship  between  the  Commission  and  the  press  is  very 
of  Commission,  ^^^^  ^  Associated  Press  correspondent  has  his  office  with  the 
Commission.  The  first  assistant  secretary  spends  almost  his  entire 
•  time  in  preparing  for  the  press  statements  of  what  the  Commission 
is  doing,  including  abstracts  of  opinions.  While  I  was  in  the  office, 
a  constant  stream  of  newspaper  men  kept  coming  in  for  news. 
Secretary  Whitney  lays  great  stress  on  this  part  of  the  Commis- 
sion's work.  He  suggests  for  California  a  card  index  of  all  the 
newspapers  of  the  state  with  their  affiliations,  dates  of  publication, 
owners,  etc.,  and  a  system  of  sending  out  statements  to  all  news- 
papers which  are  willing  to  run  Commission  news. 


REPORT  OF  COMMISSIONER  THELEN. 


123 


X. 

Library. 

The  Commission  has  employed  Dr.  Whitten,  another  Columbia 
Ph.D..  who  receives  a  salary  of  some  $3,600.00.  and  spends  his 
entire  time  in  collecting  a  library  of  reference  books  and  reports  Reference  book*. 
and  newspaper  clippings  and  magazme  articles,  referring  to  the 
subject-matter  of  the  Commission's  work.  The  Commission's  library 
is  by  far  the  most  complete  of  any  railroad  or  public  service  com- 
mission visited  by  me. 

XI. 

0 

•  Accidents. 

Immediate  notice  of  every  accident  is  given  to  the  Commission  Accidents  must 
by  telephone  or  telegraph.     One  of  the  Commission's  inspectors  is  be  reported 

on  the  ground  within  a  few  moments  and  takes  the  names  of  the  ^         .    .  ^ 
1         I  .  f  •  •        .L  £    *L    Commission, 

witnesses    and    gathers    mformation    concermng    the    cause    or    the 

accident.  The  Commission  has  a  photographer  who  takes  photo- 
graphs of  the  surroundings  whenever  applicable.  In  serious  cases, 
the  Commission  also  holds  a  hearing  of  its  own.  In  case  of  death, 
it  always  sends  a  representative  to  the  coroner's  inquest  Within 
twenty-four  hours  after  the  accident,  the  company  must  send  in  a 
written  report 


Maryland. 


Introduction. 

The  Public  Service  Commission  of  Maryland  was  created  by  Jurisdiction, 
Act  of  April  5,  1910.     The  Commission  has  jurisdiction  over  all 
railroads  of  every  kind,  common  carriers  and  gas,  electricity,  tele- 
phone,  telegraph  and  water  companies.      The  Conmiission  started 
work  in  May,  1910,  and  is  still  in  the  formative  stage. 

The  statute  seems  to  have  been  modeled  very  largely  on  the  New 
York  Act  and  partly  on  the  Interstate  Commerce  Commission  Act 


126 


LOUIS  SLOSS  «c  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


127 


'f 


'\  ■ 


F.' 


n. 

Organization  and  Office  System. 

Personnel,  The  Commission, — ^The  commissioners  arc  James  M.  Ambler, 
Chairman.  Philip  Laird,  and  Joshua  W.  Hering.  Chairman 
Ambler  is  an  attorney.     Dr.  Hering  is  a  practicing  physician. 

Employfees. — ^The  Commission  has  a  counsel  and  assistant  counsel. 
The  secretary  is  Louis  M.  Duvall.  There  are  several  clerks  in  the 
office.  The  Commission's  engineer  is  now  engaged  in  making  a 
physical  inspection  of  the  public  service  corporations  of  the  state, 
preliminary  to  a  physical  valuation. 

III. 


Maryland 

statute  modeled 

after  Ner»  York 

statute,  as  to 

stocks  and 

bonds. 

Discussion  of 
particular  case. 


Stock  and  Bond  Issues. 

The    Maryland   Statute   contains   provisions    similar   to 
those  of  the   New   York   Statute   with   reference   to   the 
approval  by  the  Commission  of  issues  of  stocks  and  bonds. 
While  I  was  visiting  the  Commission,  they  were  consid- 
ering an  application  of  a  proposed  railroad  for  permission 
to  construct  a  railroad  and  for  an  approval  of  a  stocl^ 
and  bond  issue.     The  promoters   intended    to  utilize   a 
roadbed  constructed  some  twelve  or  thirteen  years  before, 
largely  from  state  and  county  moneys,  and  to  secure  their 
fimds  from  a  popular  subscription.     The  promoters  had 
not  secured  permission  from  the  county  authorities  to  cross 
the  public  highways  nor  had  they  filed  with  the  Com- 
mission the  data  required  in  the  Commission's  rules  of 
procedure.     The    Commission   was   inclined    to   withhold 
consent,  at  least  until  the  necessary  franchise  for  crossing 
the  public  highway  had  been  secured  from  the   county 
authorities.    The  Conunission's  disinclination  to  permit  the 
establishment  of  any  more  grade  crossings  entered  largely 
into  the  case.    The  attention  of  the  Commission  seemed 
to  be  directed  very  largely  to  the  question  of  the  certificate 
of   public    convenience    and   necessity   and   not   so   much 
attention  was  paid  as  to  the  amount  of  the  stock  or  bond 
issue  which  should  be  authorized. 


As  above  stated,  this  Commission  is  in  its  formative 
period.  It  gives  every  indication  of  doing  good  work  when 
it  is  fairly  imder  way. 

INTERSTATE   COMMERCE   COMMISSION. 

While  with  the  Interstate  Commerce  Commission,  I  paid  partic- 
ular attention  to  matters  of  litigation  and  to  the  investigaion  which 
the  Commission  is  now  carrying  on  into  the  express  rates  of  the  Irtvestigation  of 
country.  I  also  conferred  with  the  Post  Office  Department  in  the  *^^^^  ''^'"• 
matter  of  certain  data  which  they  have  secured  from  the  railway 
companies  as  to  all  kinds  of  passenger  train  service,  including  express 
and  mail. 

I  also  examined  the  Commission's  filmg  system  and  was  shown 
the  method  of  handling  both  formal  and  informal  complaints  from 
the  time  of  their  filmg  to  their  final  disposition. 

Tlie  Commissioners  were  all  out  of  town  on  their  vacations,  so 
diat  I  had  no  opportunity  to  discuss  with  them  any  of  the  problems 
of  public  regulation  and  control  of  public  service  corporations. 


Georgia. 


I. 

Introduction. 

Hie  Railroad  Commission  of  Georgia  was  created  by  act  of 
October  14,  1879.  This  act  provided  for  the  appointment  of 
^ree  commissioners  to  serve  for  six  years  at  an  annual  salary  o(t 
$2,500.00  with  jurisdiction  over  all  railroad  companies  except  /urisdicfaon. 
street  railroads.  It  was  made  the  duty  of  the  Commission  to 
establish  rates  of  charges.  By  act  of  December  18,  1890,  it  was 
made  the  duty  of  the  Commission  to  investigate  all  interstate  freight 
rates  affecting  Georgia.  The  act  of  October  17,  1891,  made  it 
the  duty  of  the  Commission  to  mspect  railroads,  on  complaint  made, 
with  respect  to  their  safety.  Another  act  of  October  17,  1891, 
extended  the  jurisdiction  of  the  Commission  to  the  fixing  of  storage 
rates.     The  act  of  October  21,  1891,  extended  the  jurisdiction  of 


H 


128 


LOUIS  SLOSS  &  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


129 


the  Commission  to  express  and  telegraph  companies,  with  power  to 
fix  their  rates.  The  act  of  August  21.  1906.  provided  that  the 
commissioners  should  be  elected  instead  of  appointed.  The  act  of 
August  22.  1907.  gave  to  the  Commission  its  present  powers.  It 
increased  the  number  of  commissioners  from  three  to  five  and  gave 
to  the  Commission  jurisdiction  over  railroads  of  all  kinds,  common 
carriers,  express  companies,  telephone,  telegraph,  dock,  wharfage, 
gas.  electric  light  and  power  and  cotton  compress  companies. 

IL 

Organization  and  Office  System. 

The    Commtssion.—Tht    commissioners    arc    H.    Warner    Hill. 
Chairman.  George  HQlyer.  O.  B.  Stevens.  Chas.  Murphey  Candler, 
and  Joseph  S.  Gray.     Chairman  HQl  U  a  lawyer  and  has  served 
on  the  Board  some  eight  or  ten  years.     In  1907.  Governor  Hoke 
Smith  removed  Joe   Brown,   then  chairman  of   the   Board.       Ihc 
governor  appointed  a  member  in  place  of  Brown  and  the  law  was 
thereafter  amended  so  as  to  add  two  commissioners,  makmg  five. 
r.«,r„;«;nn^,   the  two  new  commissioners  to  be  appointed  by  the  governor.     Judge 
""""TppZZ'   HUlyer  was  appointed  by  Governor  Smith  in  1907  and  is  hkewise 
a  lawyer.     Mr.  Candler  fathered  the  present  railroad  commission 
law  in  1907  and  was  likewise  appointed  by  Governor  Smith.     Mr. 
Stevens  is  a  farmer.     Mr.  Gray  is  a  railroad  man.     The  statute 
provides  that  the  chairman  shall  devote  his  entire  time  to  the  dimes 
of  his  office  and  that  he  shall  receive  a  salary  of  $4,000.     The 
other  commissioners  are  paid  $2,500  each  and  apparently  do  not 
have  to  devote  any  considerable  amount  of  time  to  the  work. 

£mp/o};ccs.— The  employees  of  the  Commission  consist  of  Camp- 
bell Wallace,  secretary;  J.  Prince  Webster,  rate  expert;  an  assistant 
rate  expert  and  a  stenographer.  The  Commission  has  no  engineers 
or  inspectors  or  accountants. 
Budset  The  budget  is  twenty^ight  thousand  seven  hundred  dollars  per 
'  year,  of  which  twenty-thrce  thousand  seven  hundred  dollars  is  paid 
for  salaries,  leaving  three  thousand  dollars  for  contmgent  fund  and 
two  thousand  dollars  for  printing.  The  Commission  is  veor  much 
handicapped  for  lack  of  money.     Though  the  act  of  1907  makes 


it  the  duty  of  the  Commission  **to  ascertain  the  cost  of  construction 
and  present  value  of  the  properties  in  Georgia**  owned  by  each  of 
the  public  service  corporations  over  which  the  Commission  has 
control,  nothing  has  been  done  for  the  reason  that  the  legislature 
has  provided  no  funds.  As  the  contingent  fund  of  three  thousand 
dollars  must  pay  the  traveling  expenses  of  the  commissioners  and 
most  of  the  expenses  of  running  the  office,  very  little  money  is  left 
for  any  work  outside  of  the  office. 

Ofice  System. — The  office  correspondence  is  very  carefully 
indexed  in  a  bound  index  book.  No  card  system  or  letter  press 
books  are  kept.  The  incoming  mail  seems  to  consist  largely  of 
weekly  passenger  train  reports,  accident  reports  and  general  inquiries. 

III. 

Legal  Department. 

Judge  Hines  is  special  attorney  for  the  Commission.  His  chief  Utile  litigation, 
work  is  to  write  opinions  on  matters  submitted  to  him  by  the  Com- 
mission. The  Commission  has  had  almost  no  cases  in  court.  In 
1902,  the  Commission  lowered  passenger  fares  and  also  freight 
rates.  Tlie  federal  courts  refused  to  issue  an  injunction  in  the 
passenger  case,  preferring  to  wait  to  see  whether  the  fares  would 
prove  confiscatory.  In  the  freight  case,  however,  a  temporary 
mjunction  was  issued  by  the  federal  court.  The  case  has  not  as 
yet  been  decided  by  that  court  In  the  mean  time,  no  further 
reductions  in  freight  rates  have  been  made  by  the  Commission. 

IV. 

Rates. 

The   statute   provides   that   **the   power   to   determine  what   are  Rate  making 
just  and  reasonable  rates  is  vested  exclusively  in  the  Commission.**  poller  invested  in 
Under  this  power,  the  Commission  in   1 880  established  maximum  ^o^^'^'^^^n. 
freight  and  passenger  distance  tariffs  with  a  table  of  distances  and 
also   a   freight   classification   table.      Changes   in   these   tables   are 
made  from  time  to  time,  especially  in  the  classification  tables.     The 
carriers  file  with  the  Commission  all  new  tariffs,  and  these,  under  a 


130 


LOUIS  SLOSS  &  CO. 


general  order,  become  the  maximum  tariffs  of  the  Commission, 
unless  the  rales  are  in  excess  of  those  theretofore  established  in  the 
maximum  tariffs.  Under  general  order  of  the  Commission,  no 
railroad  company  can  change  a  freight  or  passenger  schedule  or 
discontinue  the  same  without  permission  from  the  Commission.  The 
Commission  has  placed  the  railroads  of  the  state  in  different  classes 
as  to  both  passenger  and  freirfit  business,  and  permits  the  members 
of  a  different  class  to  charge  different  maximum  rates  and  fares. 


Commission 

controls  issue  of 

stocks  and  bonds. 


V. 

Stock  and  Bond  Issues. 

Section  8  of  the  act  of  1907  gives  the  Commission  power 
to  control  all  issues  of  stock  and  bonds  and  conUins 
provisions  similar  to  those  in  the  New  York  law,  upon 
which  it  was  modeled.  The  Commission  has  adopted  the 
most  detailed  rules  which  I  have  seen  concerning  the 
contents  of  the  petition  for  the  approval  of  such  issues. 
The  Commission  hears  the  evidence  presented,  but  appar- 
ently does  not  send  any  one  out  to  look  at  the  petitioner's 
property.     The  Commission  has  no  money  available  for 

this  purpose. 

The   Seaboard  Ah-  Line   Railway  m   1910   applied  for 
and  was  granted  permission  to  issue  $150,000,000  of  boiids. 
This  is  a  foreign  corporation.    It  stated  to  the  Commission 
that,  in  its  judgment,  the  Commission  had  no  jurisdiction 
for  the  reason  that  the  applicant  was  a  foreign  corporation, 
but  that  it  desired  to  remove  any  possible  doubt.     After 
securing  the  authority,  the  raikoad  refused  to  comply  with 
the  order  of  the  Commission  to  report  the  disposition  of 
the  securities,  and  the  use  made  of  the  money,  and  Judge 
Hines  reported  to  the  Commission  that  it  had  no  authority 
to  compel  the  report.    Chairman  Hill  suggests  the  advisa- 
bility  of  making  sure  that  the  statutes  prescribe  a  penalty 
for  failure  to  furnish  these  reports. 
Foreign       Apparently  very  little  thought  has  been  given  by  any 
corporations,  of  the  states  to  the  question  as  to  whether  a  state  has  the 


A  particular  case. 


131 


REPORT  OF  COMMISSIONER  THELEN. 

right  to  insist  on  approval  by  its  Commission  of  issues  of 
bonds,  notes  or  other  evidences  of  indebtedness  by  foreign 
corporations,  affecting  property  within  the  state. 

VI. 
Express  Rates. 

The  Southern  Express  Company  is  the   only  express   company 
within  the  state.     The  Commission  several  months  ago  instituted  an  In)festigaiion  of 
investigation  into  the  rates,  rules  and  regulations  of  this  company  Southern  Express 
and   prepared   a   list   of   questions    asking    for   mformation.      The         ''fl'"* 
Commission  has  not  hitherto  taken  any  steps  to  ascertain  the  cost 
of  the  railroad  end  of  the  express  service. 

VII. 

PuBUC  Utilities. 

These  have  been  under  the  jurisdiction  of  the  Commission  since 
1907.  Only  two  cases  involving  the  rates  of  such  companies  have 
come  before  the  Commission.  No  system  of  accounts  have  been 
prescribed.  The  form  of  annual  return  provides  for  information 
concerning  simply  ten  or  twelve  facts  as  to  the  financial  operations 
of  the  companies. 

VIII. 
Telephone  and  Telegraph  Companies. 

The  remarks  under  section  VII  are  applicable  to  these  companies 
at  well. 


DC 

Court  Review  and  Appeal. 

No  review  is  provided  for  by  the  statute.     Judge  Hillyer  tells 
me  that  whenever  the  action  of  the  Conunission  is  attacked,   die 
procedure  is  one  de  novo  for  an  injunction.     The  Commission  is 
rather  proud  of  the  fact  that,  with  the  exception  of  the  federal  IJtigatiorL 
proceeding    above    referred    to,    no    adverse    decisions    have    been 


132 


LOUIS  SLOSS  &  CO. 


rendered  by  the  courts.  The  powers  of  the  Commission  have 
been  uniformly  upheld,  ever  since  the  case  of  Smith  vs.  CeoTgia 
Railroad.  70  Georgia.  694.  in  which  case  a  decision  m  favor  of 
the  Commission  was  affirmed  by  the  United  States  Supreme  Court. 

X. 

Railroad  Maps. 

This   Commission,    in    common   with    almost    all    of   the   otfier 
Slate  railroad  railroad  commissions,  publishes  at  stated  intervals  a  railroad  map 
map.  showing  all  the  railroads  of  the  stete.     The  Georgia  map  shows 
on  its  back  the  census  returns. 

XI. 

Passenger  Train  Delays. 

This  Commission,  in  common  with  the  Texas  and  OUahoma 
Commissions,  receives  from  each  railroad  every  week  a  statement 
of  all  passenger  train  delays  and  the  reasons  therefor.  These 
reports  are  then  filed.  The  Commission  does  not  have  an  mspectoi 
who  can  go  out  and  personally  investigate  the  delays. 

XII. 

General  Orders.  Rules  and  Regulations. 

W    h   i      The   Commission   has   prepared    freight    rules;   passenger    rules; 
Comn^ln.  rule,    governing    railroad,    expre^    and    telegraph    depots,    stadons. 
agencies  and  offices;   storage    (demurrage)    rules;   telegraph   nUes. 
passenger    and    freight    classification;    rules,    tariffs    and    classifica- 
tions    governing    express    companies;    and    some    mneteen    genera^ 
orders— which  rules,  regulations  and  orders  are  constantly  referred 
to  by  the  commissioners  in  their  conversation.     The  commissioners 
gpoke  to  me  of  the  care  exercised  in  frammg  these  rules  and  orders. 
Many  subjects  covered  by  them,  such  as  the  establishment  of  tariffs, 
inhibitions  upon  the  use  of  passes,  the  filing  of  accident  reports,  etc., 
arc    m  other  states,  provided  for  by  specific  statutory  enactments, 
but  have  been  covered  in  Georgia  under  the  broad  general  powers 
granted  to  the  Commission. 


REPORT  OF  COMMISSIONER  THELEN. 


133 


Texas. 

L 

Introduction. 

The   Railroad  Commission  of  Texas  was  established  in    1891, 
and  has  jurisdiction  over  steam  railroad  and  express  companies,  but  JurtsdicUon. 
none  over  pubUc  utilities.     An  elaborate  stock  and  bond  law  was 
approved  on  April  8.  1893. 

IL 

Organization  and  Office  System. 

The  Commission. — The  commissioners  are  Allison  Mayfield. 
chairman.  Wm.  D.  Williams  and  Joseph  R.  Wortham.  The 
commissioners  were  originally  appointed  by  the  governor  for  three  Commissioners 
year  terms,  but  the  Constitution  was  amended  in  1894  so  as  to  ^^^^^ed. 
provide  diat  the  commissioners  should  henceforth  be  elected  for  six 
years.  The  commissioners  receive  a  salary  of  $4,000.00  each. 
Governor  Colquitt  was  formerly  a  railroad  commissioner  and  seems 
to  have  been  elected  governor  on  the  record  which  he  made  in  that 
capacity. 

Employes. — The  secretary  of  the  Commission  is  E.  R.  McLean. 
The  Commission  also  employs  an  engineer,  an  auditor,  a  rate  expert 
and  some  four  or  five  clerks  and  stenographers.  The  secretary 
receives  a  salary  of  $2,000.00  and  the  engineer  $3,000.00.  The 
Commission  has  no  inspectors.  The  engineer  seems  to  do  all  the 
inspection  for  valuations  in  connection  with  the  stock  and  bond* 
issues  and  any  other  inspection  which  may  be  necessary.  The 
engineer  of  the  Commission  was  formerly  R.  A.  Thompson,  who 
is  regarded  as  one  of  the  best  railroad  commission  engineers  of  the 
country. 

III. 

Railroad  Rates. 

The  Commission  fixes  the  moving  rate.  When  the  statute  was 
passed,  the  railroads  had  in  effect  distance  tariffs  in  Texas.     The 


134 


LOUIS  SLjOSS  &  CO. 


G)mmi88ion  has  used  these  tariffs  as  a  basis  and  has  established  a 
distance  table  for  class  rates,  some  forty-seven  commodity  rate  tariffs, 
and  a  class  rate  classification.     The  annual  reports  give  the  rate 
effective  on  each  railroad.     By  reason  probably  of  the  fact  thai 
the  rates  were  but  little  lowered  at  the  outset,  the  railroads  did  not 
take  the  matter  into  the  courts.     The  Commission  from  time  to  time 
makes  alterations  in  the  rates  and  classifications  both  on  its  own 
initiative  and  on  petition  from  the  carrier.     If  a  carrier  wishes  a 
rate  to  be  altered  and  writes  a  letter  to  the  Commission  stating  its 
desire,  the  Commission,  if  favorable,  grants  the  request  by  issuing 
a  circular  which  is  mailed  to  the  applicant,  to  every  railroad  in  the 
state  and  to  other  interested  parties.     The  applicant  does  not  file  a 
tariff  showing  the  proposed  change,  but  the  Commission  issues  its 
circular  in  its  own  form. 

There  has  been  almost  no  freight  litigation  in  the  state.     Widi 

TiPO'cent  reference  to  passenger  rates,  the  Commission  ordered  a  2  cent  rate 

passenger  rate 'm  on  the  Galveston.  Houston  and  Henderson  Railroad  as  a  test 

declared  ^^^^     Yht  railroad  prompdy  secured  an  injunction  and  ultimately 

confiscaioryf.  ^^^  ^^^  ^  ^j^^  ground  of  confiscation  of  property.     The  Texas 

passenger  rate  is  now  3  cents  per  mile. 

IV. 

Emergency  Rates. 

The  act  of  April  5,  1 897,  as  amended  on  June  5,  1 899.  gives  the 
Commission  power  "when  deemed  by  it  necessary  tc  prevent  inter- 
state rate  wars  and  injury  to  the  business  or  inter«»st  of  the  people 
or  railroads  of  the  state,  or  in  case  of  any  other  emergency  to  Be 
judged  by  the  Commission,  to  temporarily  alter,  amend  or  suspend 
any  existing  freight  rates,  tariffs,  schedules,  orders  and  circulars  of 
any  railroad  or  part  of  the  railroad  within  the  state." 
Mampulation  of      I  was  informed  that  the  provision  concerning  the  prevention  of 
rates,  interstate  rate  wars  has  little  or  no  meaning.     The  real  purpose  of 
the  provision  was  to  give  power  to  the  Texas  Commission  to  lower 
an  intrastate  rate  from  a  producing  to  a  consuming  center  in  cases 
in  which  an  interstate  rate  from  a  producing  center  outside  of  the 
state  had  been  lowered,  so  as  to  lessen  the  differential  theretofore 
enjoyed  by  the  Texas  producers.     In  cases  of  this  kind,  the  Texas 


REPORT  OF  COMMISSIONER  THELEN. 


135 


Commission  regulates  the  state  rates  so  as  to  keep  Texas  markets  for 
Texas  producers.  The  fear  that  their  intrastate  rates  within  Texas 
will  be  lowered  has  prevented  carriers  from  lowering  their  interstate 
rates.  In  a  number  of  cases  the  railroads  have  written  to  the 
Commission  asking  whether  it  would  have  any  objection  to  a  reduc- 
tion of  an  interstate  rate  from  Louisiana  into  Texas,  and  the 
Commission  had  uniformly  replied  that  it  would  have  such  objection 
m  any  case  in  which  Louisiana  products  would  thereby  come  into 
competition  with  those  produced  in  Texas.  As  a  result  of  the 
Commission's  uniform  reply,  the  railroads  in  these  cases  have 
refrained  from  reducing  the  interstate  rates. 

The  rate  expert  told  me  that  as  far  as  he  knew,  this  paragraph 
had  never  been  attacked  on  the  ground  that  the  emergency  rates 
were  established  without  any  notice  whatsoever  to  the  carrier  and 
consequently  without  due  process  of  law.  We  agreed  that  it 
would  be  wiser  to  give  some  short  notice,  such  as  three  days. 


V. 

ElxpREss  Rates. 

Early  in  its  history,  the  Commission  established  a  distance  express 
tariff  applying  on  merchandise  for  every  pound  up  to  100;  a  similar 
tariff  for  general  specials;  similar  tariffs  for  certain  commodities  such 
as  green  and  fresh  fruits,  melons  and  vegetables,  beer  and  other 
liquors,  mineral  and  spring  water;  also  an  express  classification  with 
rates  and  rulings. 

The  Conmiission  seems  very  largely  to  have  established  die  rates  Im>esiigation  of 
and  regulations  in  effect  at  the  time,  so  that  no  complaint  was  made  express  rates, 
by  the  express  companies.  Later,  when  Commissioner  (now  Gov- 
ernor) Colquitt  was  elected,  he  started  an  investigation  for  a 
reduction  of  express  rates.  The  Commission  made  an  order  reducing 
express  rates  (an  early  report  states  that  the  average  reduction  was 
about  20  per  cent,  although  it  is  very  questionable  whether  the 
reduction  was  in  fact  so  large),  whereupon  the  express  companies 
at  once  enjoined  the  Commission,  as  is  their  usual  practice  in  these 
cases.  Mr.  Colquitt  took  a  mass  of  testimony  in  San  Francisco 
and  elsewhere.  After  some  six  or  eight  months,  the  matter  was 
compromised  by  a  new  order  making  an  average  cut  of  some  8  per 
cent,  and  the  rates  established  by  that  order  are  in  effect  today. 


136 


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REPORT  OF  COMMISSIONER  THELEN. 


137 


VI. 

Department  of  Statistics  and  Accounts. 

Mr.  W.  F.  Fitzgerald,  who  was  for  over  twenty  years  auditor 
of  the  Southern  Pacific  Company,  has  charge  of  the  work  of  this 
department 
Railroads  make      The  railroad  companies  make  annual  returns  On  the  forms  pre- 
annual  reports,  scribed  by  the  Texas  Commission.     These  forms  are  modeled  on 
those  prepared  by  the  Interstate  Commerce  Commission  for  steam 
railroads.     In  addition  to  the  information  called  for  by  the  inter- 
state forms,  the  Texas  forms  provide  for  a  segregation  of  operating 
revenue,   both   freight  and  passenger,   into   local,   interline-interstate 
and  interlme-intrastate.     The  state  returns  call  for  a  segregation  of 
operating  expenses  into  one  hundred  and  sixteen  accounts,  based  on 
those    prescribed    by    the    Interstate    Commerce    Commission.      In 
addition    to    this    information,    the    form    calls    for    the    following 
information : 

Information      1 .     As  to  passenger  traffic,  it  calls  for  the  number  of  passengers 
re<7wVcJ  o/ carried,  earning  revenue,  and  the  number  of  passengers  carried  one 
railroads,  ^^^  ^^  ^^  j^^j^  interline-state  and  interline-interstate  traffic. 

2.  As  to  freight  traffic,  similar  information  is  requested  as  to  the 
number  of  tons  carried  earning  revenue,  and  the  number  of  tons 
carried  one  mile. 

3.  As  to  train  mileage,  information  is  called  for  as  to  revenue 
freight,  revenue  passenger,  revenue  mixed,  revenue  special  service, 
total  revenue,  train  mileage  and  non-revenue  totals  as  to  freight, 
passenger  and  work  trains. 

Information  When  the  returns  are  filed  with  the  Commission,  they  are  care- 
carefull^  checked  ^i^y  checked  over  by  Mr.  Fitzgerald  and  requests  for  corrections 
hV  Commission.  ^^  amplifications  are  frequenUy  made  by  him.  Before  he  took 
office,  the  reports  were  simply  filed  without  being  checked  over. 
The  returns  are  analyzed  by  Mr.  Fitzgerald  and  appear  in  twenty- 
six  carefully  worked  out  statistical  tables  in  the  annual  report  of  die 
Commission.  The  work  of  the  Texas  Commission  in  analyzing 
and  tabulating  the  reports  of  the  railway  companies  ranks  with  the 
work  of  the  Massachusetts  Commission  as  among  the  best  in  the 


:1        , 

I 


country  and  can  be  referred  to  with  profit  by  the  California  Com- 
mission when  it  starts  on  this  same  work. 

Tlie  Commission  receives  also  from  each  railroad  a  monthly 
report  of  operating  revenues,  operating  expenses,  passenger  traffic, 
freight  traffic  and  train  mileage.  Mr.  Fitzgerald  considers  these 
reports  valuable  for  the  reason  that  they  allow  the  Commission  to  see 
month  by  month  just  how  the  railroads  are  spending  their  money 
and  thus  enables  the  Commission  to  stop  unauthorized  expenditures. 
Texas  and  Oklahoma  seem  to  be  the  only  Commissions  which 
require  these  monthly  statements. 

Several  years  ago.  the  Commission  promulgated  its  bookkeeping 
rules  At  and  A2.  Number  A2.  prescribing  the  keeping  of 
accounts  so  as  to  segregate  operating  expenses  as  to  passenger  and 
freight  for  each  of  the  one  hundred  and  sixteen  accounts  prescribed 
by  the  Interstate  Commerce  Commission,  and  also  as  to  local, 
mterline-intrastate  and  interline-interstate,  was  enjoined  in  the  district 
court  of  Travis  County,  in  the  suit  of  Texas  and  Pacific  Raili»a}f 
Company^  vs.  Railroad  Commission  of  Texas.  The  district  court 
in  that  case  rendered  judgment  against  the  Commission;  the  case 
was  recently  decided  on  appeal  in  the  court  of  Civil  Appeals  in 
tavor  of  the  Commission.  In  this  order,  the  Commission  prescribed 
the  bases  of  segregation,  and  the  railroads  severely  attacked  the 
tame.  These  bases  should  be  compared  with  those  used  by  the 
Wisconsin  Commission  in  the  Buell  case,  those  prescribed  by  the 
Oregon  Commission  and  those  used  by  Statistician  James  Peabody 
of  the  Santa  Fe. 

Tlie  Texas  Commission  uses  for  express  companies  the  form  of 
return  prescribed  by  the  Interstate  Commerce  Commission. 

VII. 

Valuation  of  Railroad  Properties. 

The  Railroad  Commission  Act  provides  that  the  Commission 
**shall  ascertain  as  early  as  practicable  the  amount  of  money 
expended  in  the  construction  and  equipment  per  mile  of  each  rail- 
way in  Texas,  the  amount  of  money  expended  to  procure  the  rights 
of  way  and  the  amount  of  money  it  would  require  to  reconstruct 
the  railroad  bed.  track,  depots  and  transportation,  and  to  replace 
all  the  physical  properties  belonging  to  the  railroads.** 


Monthly^  railroad 
reports. 


Commission 
prescribed  form 
of  keeping 
accounts. 


Reports  of 

express 

companies. 


vifc*. 


138 


LOUIS  SLOSS  &  CO. 


REPORT  OF  COMMISSIONER  THELEN. 


139 


il 


ii 


Phyfsical  valuation      Section  3  of  the  stock  and  bond  law  provides  that  "it  shall  be 
of  railroads,  the  duty  of  the  railroad  commission  to  ascertain,  and.  in  writmg, 
report  to  the  Secretary  of  State  the  value  of  each  railroad  in  this 
state,  including  all  its  franchises,  appurtenances  and  property.'* 

It  will  be  noted  that  the  directions  contained  in  these  two  statutes 

ditfer  with  respect  to  franchise  values.     The  duty  imposed  by  the 

Railroad  Commission  Act  is  to  ascertain  the  value  of  the  physical 

properties  of  the  railroads,  whereas  the  duty  imposed  by  the  Stock 

and  Bond  Act  is  to  ascertain  the  value  of  each  railroad,  including 

Value  of  all  its  franchises  and  appurtenances.     It  might  well   be  that  the 

railroad  value  of  a  franchise  might  be  considered  in  determining  the  amount 

franchises,  ^f  stocks  and  bonds  which  a  railroad  company  may  properly  issue, 

while  it  would  be  improper  to  consider  the  value  of  that  franchise 

for  rate  fixing  purposes.     I  assume  that  some  such  idea  is  responsible 

for  the  difference  in  the  language  of  these  two  statutes. 

The  Texas  Commission,  in  such  valuations  as  it  has  made,  has 

apparendy  acted  under  the  terms  of  the  stock  and  bond  law  and 

under  that  law  has  valued  some  12.988.09  out  of  13,819.44  mUes 

of  main  trackage  in  the  state. 

Methods  of       For  the  purpose  of  ascertaining  the  value  of  the  railroads  under 

ascertaining  the  stock  and  bond  law,  blanb  calling  for  values  of   (a)   railroad 

phyfsical  valuation,  y^^  tracb,  etc.,  (h)  rolling  stock,   (c)  miscellaneous — are  handed 

to  the  railroads  affected.  Upon  receipt  of  these  returns,  the  engineer 
checks  over  the  figures.  Under  the  head  of  "c"  appear  street 
franchises,  legal  and  engineering  expenses  and  interest  during  con- 
struction, but  not  commissions  and  discounto.  All  general  franchises 
are  valued  at  6  per  cent  of  the  value  of  the  railroads  and  are  then 
added  to  the  totals  derived  by  the  addition  of  a,  b,  and  c,  for  Ac 
purpose  of  covering  such  items  as  discount  on  bonds  and  contingencies 
which  could  not  be  considered  in  the  scheme  of  valuation  provided 

by  law. 

No  valuation  under  the  stock  and  bond  law  has  ever  been  con- 
tested in  Texas.  There  was  some  talk  when  I  was  in  Austin  to  the 
effect  that  the  International  and  Great  Northern  Railroad  would 
appeal  from  a  recent  valuation  of  the  Commission,  but  noUiing 
definite  has  been  done  in  the  matter.  This  railroad  wished  to  issue 
bonds  in  excess  of  the  amount  which  could  be  issued  on  the  basis 
of  the  valuation  made  by  the  Commission. 


VIII. 
Stock  and  Bond  Law. 

Texas  has  the  most  complete  stock  and  bond  law  of   Texas  Stock  and 
which    I   know.     It    prescribes    practically   every    detail.  Bond  Larv  very 
leaving  little  or  nothing  to  the  discretion  of  the  Commis-  comprehensive, 
sion.    It  declares  that  no  bonds  or  other  indebtedness  shall 
issue,  secured  by  lien  or  mortgage  on  railroad  properties  in 
Texas,  above  the  reasonable  value  of  the  property,  except  Mo  securities  may 
that  in  case  of  emergency  the  issue  may  run  up  to  50  per  be  issued  in 
cent  in  excess  of  such  value.  The  Commission  has  confined  <^^<^^nt  above 
emergencies  to  fire,  flood  or  other  acts  of  God.    The  statute  ^  "^  ^.^ 
provides  for  a  valuation  of  railroad  properties  as  described  except 
in  paragraph  VII  hereof,  with  the  right  on  the  part  of  the 
company  to  a  hearing  before  the  Commission ;  for  the  filing 
by  the  Commission  of  its  certificate  of  value  with  the  secre- 
tary of  state;  for  the  authorization  of  the  issue  by  the 
Commission;  and  for  the  registration  of  its  bonds  by  the 
railway  company  with  the  secretary  of  state,  with  adequate 
penalties. 

As  every  railroad  corporation  doing  business  in  Texas 
except  the  Texas  Pacific  (under  a  federal  charter)  and  the 
Atchison,  Topeka  and  Santa  Fe,  a  leasing  line,  operates 
under  a  Texas  charter,  the  question  whether  the  stock  and 
bond  law  applies  to  a  foreign  corporation  has  not  arisen 
in  Texas. 

IX. 

Control  Over  Corporations. 

By  providing  that  each  railway  shall  keep  in  Texas  an  office  for  Stringent 
transfer  of  stock,  that  the  directors  must  hold  at  least  one  meeting  regulation  of 
annually  in  Texas,  that  no  railway  company  shall  consolidate  with  railroad  ^ 
any  other  railway  company  organized  under  the  laws  of  any  other  ^^^P^^^ttons, 
state  or  the  United  States,  and  similar  provisions  in  her  constitU' 
don   and   statutes,   Texas   has   driven   all    the   railway   companies, 
except  the  two  hereinbefore  mentioned,  to  take  out  separate  charters 
in  Texas.     Tliis  result  has  simplified  the  control  in  Texas  over  stock 
and  bond  issues. 


f'fi 


140 


LOUIS  SLOSS  &  CO. 


t 


I! 


ii{) 


'I      ft 


I  k\ 


X. 

Depot  Complaints. 

Co/nmisiion      I  was  informed  that  the  Commission  hancflcs  a  large  number  of 

regu/ato  j^jjjplainls    calling    for    the    erection    of    additional    depots   or    tfie 

iiation  facilities,  -^^^^y^^^^  of  existing  ones.     The  Commission  has  no  inspectors 

to  send  out  on  the  line;  the  engineer  performs  all  this  work.  The 
complainant  presents  his  case,  with  a  photograph  where  applicable, 
and  the  defendant  its  case,  whereupon  the  Commission  decides.  In 
the  important  Dallas  Union  Depot  case,  the  attorney  general  ruled 
that,  as  the  statute  now  reads,  the  Commission  cannot  prescribe  the 
exact  site  of  a  union  depot,  though  it  has  authority  to  order  the 
erection  of  such  depot  The  Conmiission.  in  its  1910  report, 
referring  to  union  depots,  recommends  that  the  statute  be  amended 
so  as  to  give  to  the  Commission  authority  to  fix  the  site  for  the 
location  of  such  depots  and  also  authority  to  enforce  compliance 
with  the  orders  of  die  Commission  in  the  premises. 

XL 

Newspapers. 

Publicity  of  Ten  copies  of  each  circular  changing  rates  and  ten  copies  of  any 
Hfork  of  statement  which  may  be  prepared  by  the  Commission  for  publication 

Commission.  ^^^  ^j^^^j  ^^  ^  newspaper  file  in  the  office.  The  reporters  come 
in  each  day  and  take  otf  the  copies  for  their  respective  papers.  The 
Texas  Commission,  in  common  with  most  of  the  wide  awake  Com- 
missions of  the  country,  lays  great  stress  on  the  matter  of  publicity. 

Oklahoma. 

L 

Introduction. 

The  Corporation  Commission  of  Oklahoma  was  created  by  section 

15  of  article  9  of  the  Constitution  (1907)  and  most  of  ite  powers 

Jurisdiction,  and  duties  are  defined  by  the  Constitution  itself.     The  Commission 

has  jurisdiction  over  railroad,  express,  telegraph,  telephone,  oil  pipe. 


REPORT  OF  COMMISSIONER  THELEN. 


141 


car  companies  and.  at  least  to  a  certain  extent,  over  heat,  light, 
power  and  water  companies.  Some  of  these  latter  utilities  have 
denied  the  right  of  the  Commission  to  regulate  their  rates.  The 
Commission  also  claims  the  right  under  another  section  of  the  Con- 
stitution to  regulate  and  fix  the  price  of  any  article  as  to  which  a 
monopoly  exists,  and  under  this  section  has  in  certain  cases  fixed 
the  rates  of  ice  and  lumber. 

The  Commission  has  twice  asked  the  legislature  to  pass  a  statute  Control  of 
giving  to  it  control  over  the  issues  of  stocb  and  bonds.    The  statute  slock  and 
as  proposed  specified  that  the  sum  of  stock  and  bonds  should  not  ^^^"^  "*"«' 
exceed  the  value  of  the  property  except  in  emergency  cases  when 
the  total  might  run  up  to  50  per  cent  in  excess  of  the  value.     The 
Commission  likewise  has  no  control  over  the  exercise  of  franchise 
rights  or  the  commencement  of  construction  of  a  plant.    The  munici- 
palities themselves  determine  these  matters  and  uniformly  grant  the 
new  companies  the  desired  permission  to  enter  the  field. 

IL 

Organization  and  Office  System. 

The  Commission.— Tht  commissioners  are  J.  E.  Love,  chairman.  Personnel  of 
A.  P.  Watson,  and  George  A.  Henshaw.  Mr.  Love  is  a  cattle  Commission. 
raiser.  Mr.  Watson  is  about  64  years  of  age,  a  farmer  and  formerly 
a  colonel  in  the  Confederate  Army.  Mr.  Henshaw  was  formerly 
Assistant  Attorney  General  and  was  a  member  of  the  Oklahoma 
Constitutional  Convention.  The  Commission  is  one  of  the  most 
active  in  the  country.  The  commissioners  devote  all  their  time  to 
the  duties  of  their  office.  They  are  elected  at  large  for  terms  of 
six  years  and  receive  an  annual  salary  of  $4,000  each. 

Employees. — ^The   office   is   divided   into   the   following   depart- Departments, 
ments: 

1.  Executive. 

2.  Auditing. 

3.  Engineering. 

4.  Rate. 

5.  Telephone. 

6.  General  corporation  records. 


V 


i*^  f»  • 


142 


LOUIS  SLOSS  &  CO. 


f« 


Salaries,  The  law  and  executive  clerk,  E.  C.  Pallon.  receives  a  salary  of 
$2,000.00:  the  rate  expert.  Mr.  Bee.  $3,600.00;  the  auditor. 
Mr.  Stout.  $2,500.00;  the  telephone  expert.  Geo.  P.  Player, 
$2,500.00;  the  engineer  $3,000.00;  and  the  corporation  record 
clerk  $2,200.00.  In  addition  to  these  men.  the  G>mmission 
employs  an  assistant  engineer  and  two  or  three  taritf  men;  several 
assistants  to  the  auditor;  two  or  three  assistants  each  to  the  rate 
expert,  the  telephone  expert  and  the  corporation  record  clerk;  and 
several  official  stenographers  and  some  four  or  five  office  stenographers. 
Appropriatiom,        For  the  two  years  from  July  1,  1909.  to  June  30.   1911,  the 

legislature  appropriated  for  salaries,  printing  and  court  expenses 
$60,200.00;  for  contingent  expenses  $120,000.00;  and  for  rate 
litigation  in  the  federal  courts  $50.000.00— being  a  total  of  $230.- 
200.00  for  two  years,  or  $1 15.100.00  for  one  year.  For  details 
of  the  contingent  account,  see  the  1909-1910  report,  at  page  11. 

HL 

Court  Procedure. 

Appeal  direct  to       Section  20  of  Article  IX  of  the  constitution  provides  that  from 
Supreme  Court   |jjc  orders  of  the  Commission  therein  specified,  an  appeal  may  be 

taken  directly  to  the  State  Supreme  Court  The  constitution  does 
not  specify  the  time  within  which  the  appeal  may  be  taken,  but 
Discussion,  Commissioner  Henshaw  told  me  that  the  courts  had  ruled  that  it 
may  be  taken  at  any  time  within  a  year.  The  constitution  provides 
that  such  appeal  may  be  taken  in  designated  cases  only,  as  from 
orders  prescribing  rates,  charges  and  classifications,  and  that  the 
legislature  may  also  provide  by  general  laws  for  appeals  from 
orders  of  the  Commission  in  other  cases.  Mr.  Patton  pointed  out 
the  importance  of  the  limitation  just  noted.  When  the  Commission 
made  its  important  accounting  order  (No.  50).  the  corporations 
asked  the  Commission  to  approve  a  supersedeas  bond,  which  the 
Commission  refused  to  do.  on  the  ground  that  this  was  not  a  case  in 
which  an  appeal  would  lie  (June  29.  1909).  On  June  30.  1909. 
the  supreme  court  denied  the  request  of  the  petitioners  for  a  super- 
sedeas on  the  ground  that  this  was  not  an  appealable  case.  Mr. 
Patton  pointed  out  other  cases,  such  as  cases  of  request  for 
information  to  be  used  in  pending  litigation,  in  which  the  Com- 
mission's hands  should  not  in  his  judgment  be  tied. 


«_ 


REPORT  OF  COMMISSIONER  THELEN. 


143 


Section  21  provides  that  the  supreme  court  may  grant  a  writ  of  Supreme  Court 
supersedeas,  but  that  it  cannot  do  so  until  a  suspending  bond  shall  "V*^  ^^^^  F^^ 
first  have  been  approved  by  the  Commission  in  an  amount  sufficient 
to  insure  the  payment  of  all  charges  in  excess  of  those  finally  estab- 
lished by  the  court  on  appeal.  The  Constitution  provides  that  the 
Commission  must  thereupon  forthwith  direct  the  appealing  company 
to  keep  such  accounts  as  m  the  judgment  of  the  Commission  may 
suffice  to  show  the  amounts  being  charged  or  received  by  the 
company  in  excess  of  the  charge  allowed  by  the  Commission, 
together  with  the  names  and  addresses  of  the  persons  to  whom  such 
overcharges  will  be  refimdable  in  case  the  charges  made  by  die 
company  are  not  sustained  on  appeal.  On  the  final  decision,  the 
Commission  may  direct  the  manner  of  the  payment  of  refimds.  Such 
appeals  shall  have  precedence  in  the  supreme  court  over  all  other 
cases  except  habeas  corpus  and  state  cases  already  on  the  docket 
of  the  court 

Mr.   Patton  was  of  the  opinion  that  the  requirements  to  keep  DiscusaotL 
books  showing  excess  collections   is   a  powerful   detriment  against 
appeals  from  the  orders  of  the  Commission.  It  is  an  expensive  task 
to  keep  such  records.     Wells-Fargo  &  Company  are  keeping  them 
under  their  appeal  from  the  Commission's  order  of  June  11,1 909. 

Section  22  provides  that  the  supreme  court  may  not  consider 
any  new  or  additional  evidence,  "but  the  court  may,  when  it 
deems  it  necessary,  in  the  interest  of  justice,  remand  to  the  Com- 
mission any  case  pending  on  appeal  and  require  the  same  to  be 
further  investigated  by  the  Commission,  and  reported  upon  to  the 
court,  before  the  appeal  is  finally  decided."  Commissioner  Hen- 
shaw thinks  that  this  is  a  good  provision,  for  the  reason  that  the 
court  is  thus  enabled  to  give  to  the  Commission  another  opportunity 
in  any  case  in  which  otherwise  it  would  have  to  decide  against  the 
Commission.  The  Wells-Fargo  &  Company  case  is  now  back 
before  the  Conunission  to  ascertain  just  what  losses  in  revenue,  if 
any.  would  be  suffered  under  the  Commission's  order,  if  it  went  into 
effect 

Whenever  die  supreme  court  reverses  an  order  of  the  Commission  /n  case  of 
affecting  rates,  charges,  classifications,  etc.,  it  must  substitute  another  '"^^^^''^at. 
rate,  charge  or  classification,  so  that  its  function  in  this  respect  is 
legislative   and   not  judicial.    This  provision  was   taken   from   the 


V. 

y, 


144 


LOUIS  SLOSS  &  CO. 


\f, 


(i 

Itf 


;    ! 


Virginia  constitution,  referred  to  in  the  case  of  Prentiss  vs.  Atlantic 
Coast  Unc,  211  U.  S.  210.  in  which  case  it  was  held  that  the 
federal  courts  should  not.  as  a  matter  of  comity,  assume  jurisdiction 
to  enjoin  an  order  of  a  state  railroad  commission  fixing  rates,  until 
the  corporation  has  completely  exhausted  ite  remedy  by  appeal  to  the 
final  rate  fixing  body  in  the  state,  which  in  Virginia  and  Oklahoma 
is  the  supreme  court.  Notwithstanding  an  appeal,  the  Commission 
has  the  right  to  make  other  orders  in  the  same  matter  based  upon 
different  circumstances  and  conditions.  This  provision  is  obviously 
to  prevent  the  tying  up  of  the  entire  rate  situation  during  the 
pendency  of  court  proceedings. 

IV. 
Litigation. 

Afany?  appeals        The  Oklahoma  Commission  has  had  more  cases  on  appeal  than 
from  orders  of  any  other  railroad  commission  in  the  country.     It  has  had  almost 
Oklahoma   j^j  ^^ny  appeals  as  all  the  other  conamissions.  which  I  investigated. 
Commission.   p„^  ^^^^jher. 

Of  the  first  one  hundred  cases  coming  before  the  Commission  on 
complaints  of  third  parties  and  formally  heard  before  the  Commis- 
sion, appeals  were  uken  in  thirty-seven  cases.  The  record  in  these 
cases  is  as  follows: 

1 .  Affirmed   (or  appeals  dismissed) 13 

2.  Reversed   ^ 

3.  Pardy  affirmed  and  pardy  reversed 2 

4.  Remanded  for  further  testimony 2 

5.  Pending    ^^ 

of  the  cases  reversed,  the  Commission  had  in  one  case  ordered 

d  railroad  to  construct  at  its  own  expense  a  side  track  so  as  to 

Character  of  equalize  a  disadvantage  of  location.     In  two  cases,  it  had  ordered 

decisions   a  railroad  to  install  telegraph  service  for  commercial  purposes.     In 

appealed  from,   one  case,  it  had  held  that  a  railroad  would  have  to   install   all 

desired  street  crossings  at  its  own  expense,   and  in  the   fifth  case, 
'  involving  the  installation  of  telegraph  service  for  bulletining  passen- 

ger trains,  there  was  no  evidence  as  to  amount  of  passenger  service 
at  the  station. 


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■^'■»  f'~^  r  H^iPsi?^ ' 


REPORT  OF  COMMISSIONER  THELEN. 


145 


As  bearing  upon  the  reason  for  so  many  appeals,  it  is  well  to 
note  that  the  Commission  granted  the  petitioner's  prayer  in  its 
original  form  or  a  modified  form  in  eighty-six  out  of  those  one 
hundred  cases  and  denied  it  in  only  fourteen. 

In  cases  on  the  Commission's  own  initiative,  in  which  proposed 
orders  are  issued  and  published  and  final  orders  are  then  either  issued 
or  not  issued  after  hearing,  the  railroads  appealed  in  nearly  every 
case.  Fifteen  of  these  appeals  were  from  orders  establishing  rates 
on  different  commodities.  The  railroads  also  appealed  from  orders 
directing  reports  as  to  earnings,  state  and  interstate;  requiring  accident 
reports;  requiring  physical  connections  at  junction  points;  establishing 
demurrage  and  storage  rules;  requiring  the  promulgation  of  all  rules 
and  regulations;  and  requiring  all  public  service  corporations  to 
maintain  an  office  in  the  state. 

The  most  important  cases  now  in  litigation  involve  the  rates  of:  Cases  noVf  m 

I       D    I      J  litigation, 

1 .  Kailroads. 

2.  Telegraph  companies. 

3.  Express  companies. 

Railroads. — ^The  matters  in  litigation  comprise  the  2  cent  Ti»o-cent 
maximum  passenger  fare  law  (part  of  the  Constitution)  and  the  P<^cnger  fare 
different  commodity  rates  prescribed  by  the  Commission.  The  ^  *  t.. 
corporations  went  to  the  federal  courts  and  secured  injunctions,  so 
that  these  rates  have  never  gone  into  effect  The  case  went  to  the 
United  States  Supreme  Court  on  the  contention  of  the  state  that 
under  the  Prentiss  case.  211  U.  S.  210.  it  was  the  duty  of  tfie 
corporations  to  first  exhaust  their  remedy  by  appeal  to  the  state 
supreme  court  Judge  Hook,  in  the  circuit  court,  differentiated  this 
case  from  the  Prentiss  case  on  the  ground  that  the  Commission 
had  refused  to  grant  a  supersedeas  bond.  The  United  States 
Supreme  Court  refused  to  decide  this  point,  but  sent  the  case  back 
to  Judge  Hook,  who  decided  three  or  four  months  ago  against  the 
state.  Commissioner  Henshaw.  in  referring  to  die  decision,  said 
that  it  would  be  impossible  to  secure  a  fair  decision  from  the  federal 
courts  as  long  as  they  insisted  on  holding  that  the  cost  of  state  service 
was  from  two  or  eight  times  as  much  as  the  cost  of  interstate 
service. 


146 


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REPORT  OF  COMMISSIONER  THELEN. 


147 


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Mr.  Henshaw  said  that  he  hardly  thought  the  Commission  would 
further  contest  the  passenger  fare  case.  Section  37  of  article  IX  of 
the  constitution,  while  establishing  a  2  cent  maximum  passenger 
fare,  gives  the  Commission  power  "to  exempt  any  railroad  from  the 
operation  of  this  section  upon  satisfactory  proof  that  it  cannot  earn 
a  just  compensation  for  the  services  rendered  by  it  to  the  public,  if 
not  permitted  to  charge  more  than  2  cents  per  mile  for  the  trans- 
portation of  passengers  within  the  state.'*  The  Commission  hat 
exempted  from  the  provisions  of  the  2  cent  law  all  railroads  applying 
for  exemption. 

Orders  afecimg        Telegraph    Rates. — On    December    2.    1908.    the    Commission 
telegraph   issued   its   order    No.    149   prescribing   telegraph   rates,   rules   and 
companies,    regulations.     Commissioner  Watson  told  me  that  there  would  have 
been  no  appeal  had  it  not  been  for  rule  4  providing  that  the  receiv- 
ing clerk  must  mark  on  the  message  the  time  of  filing,  and  rule  6 
*  providing  that  the  operator  on  the  other  end  of  the  line  must  mark 

on  the  message  the  time  when  received  by  him. 

On  December  19,  1908.  the  case  was  certified  to  the  Supreme 
Court  On  December  28.  1909,  tfie  mandate  of  the  Supreme 
Court  was  received,  requiring  the  taking  of  further  evidence  to 
show  what  the  company  would  have  lost  had  the  order  gone  into 
effect.  If  I  am  not  mistaken,  a  heavy  indemnity  bond  has  been 
filed  by  the  company  and  it  is  also  keeping  an  account  of  excess 
payments. 

Express  Rates. — On  June  11,1 909,  the  Commission  issued  its 
opinion  and  order  No.  203,  prescribing  new  rates,  rules  and  regu- 
lations for  express  companies.  This  is  a  long  and  carefully  worked 
out  order  prescribing  distance  tables  for  merchandise,  general 
special,  milk  and  cream,  and  other  special  commodities  and  also 
classifications,  rules,  etc.,  and  making  a  total  reduction  in  rates 
Litigation  over  of  about  20  per  cent  All  four  express  companies,  Wells-Fargo 
express  rates.  ^  G)mpany,  United  States,  American  and  Pacific,  appealed  to 
the  State  Supreme  Court,  giving  bonds  m  amounts  of  $200,000, 
$33,000,  $35,000  and  $4,500  respectively.  The  Supreme  Court 
remanded  the  case  with  instructions  to  ascertain  the  amount  of  lost 
which  would  have  been  sustained,  had  the  order  gone  into  effect 


The  express  companies  have  taken  a  large  amount  of  testimony  oa 
that  point  but  the  state  has  not  as  yet  had  an  opportunity  to  rebut 
the  same. 

I  was  informed  that  the  express  companies  are  trying  to  com- 
promise the  case  and  that  they  have  made  several  propositions 
which,  while  seeming  fair,  have  as  a  matter  of  fact  made  but  very 
small  reductions,  for  the  reason  that  the  proposed  reductions  are 
in  rates  under  which  but  few  commodities  move.  The  express 
companies  seem  to  be  chafing  under  the  expense  necessary  to  keep 
account  of  every  shipment  made,  with  the  name  and  address  of  the 
consignor  and  the  amount  paid  in  excess  of  the  Conmiission's  order. 

V. 

I 

Commission's   Business. 

Until  recently  the  matters  on  which  the  Commission  took  action 
were  divided  into  (1)  complaints;    (2)  proposed  orders,  on  Com-  Methods  of 
mission's   own    initiative;     and    (3)    citations    for   disobedience    of  handling  business. 
Commission's  orders.      At  present  all   matters   are  placed  on   one 
general  docket  file.      The  character  of  the  Commission's  activities 
appears  from  the  following  compilation: 

Complaints. — Of  the  first  one  hundred  complaints  on  which  the 
Commission  took  action,  other  than  to  dismiss   at  the  request  of 
plaintiff  or  for  lack  of  prosecution,  the  nature  of  the  cases  was  as  Character  of 
follows:  complaints. 

Steam  Railroads. 

Passenger  trains — stop  on  signal 8 

Depots — erection  or  mcrease  in  size 18 

Shipping  facilities 5 

Sidetracks,  spurs,  switches 9 

Railroad   crossmg — ^with   another   railroad 1 

Railroad  crossing — ^with  highway 2 

Passengers — treatment  of,  after  wreck I 

Physical  connections,  railroads 2 

Stations 2 

Bulletining  of  trains 1 

Stock  pens,  water  in 2 


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Agent  at  depot 1 

Depot  to  be  moved I 

Additional  passenger  service 5 

Name  of  station,  change  in 1 

Waiting  rooms   1 

Stockyards  scales    I 

Agent,  discourteous  treatment  by 1 

Union  stations 1 

Drainage  opening    1 

Irderurhan  Railroads, 

Rates,   reduction  of 1 

Streei  Railroads, 

Extension  of  service 1 

Telephone  Companies, 

Installation  in  railroad  depot 9 

Rates,   reduction   of 1 

Rates,    discrimination   in 1 

Physical    connection    6 

Installation  in  private  residence 1 

Telegraph  Compames. 

Installation  or  restoration  of  service 7 

Cas  Companies, 

Gas  to  be  furnished I 

Express  Compames, 

Establishment  office  and  agent 2 

Ice  Companies, 

Rates,  reduction  in 1 

Much  time  Service,  short  weight,  refusal  to  sell,  etc 4 

auestions  of      ^  perusal  of  the  foregoing  table  will  show  a  very  great  amount 

service,  facilities  of  time  devoted  by  the   Commission   to   the  consideration  of  the 
and  equipment,  questions  of  service,  facilities  and  equipment 


REPORT  OF  COMMISSIONER  THELEN. 


149 


Proposed   Orders, — ^These    have    dealt   with   matters    of    fixing  Character  of 
rates;    accounting  rules;    the  filing  of  plans  and  specifications  of  all  orders  of 
depots;     accident    reports;     physical    connection    of    railroads    at  ^ommmian. 
junction    points;     the    filing    of    inventories    of    all    telephone    and 
telegraph  properties;    fixing  the  amount  of  excess  fare  to  be  charged 
to  passengers  without  tickets;   demurrage  and  storage  rules;   handling 
and   moving   of   freight;     filing   documents   with    the   Commission; 
requiring  all  public  service  corporations  to  maintain  offices  in  the 
state;     the    filing   of    tariffs    by    express    companies,    etc.      About 
seventy-five  proposed  orders  were  made,  of  which  quite  a  number 
were  never  issued. 

Citations. — ^Tliese  citations  are  for  violations  of  the  Commission's  Cases  of 
orders  on  information  of  third  parties.     The  Commission  has  power  contempt  of 
to  enforce  compliance  with  its  orders  by  the   imposition  of   fines.  ^  <*'"'""*»<'"• 
The  usual  fine  for  contempt  of  the  Commission's  orders  is  some- 
where between  $100.00  and  $500.00.     Up  to  1911,  there  were 
one    hundred    and    twenty-three    of    these    cases.      The    fines    are 
imposed  on  the  theory  that  the  railroad  is  in  contempt  for  failure 
to  use  due  diligence  in  obeying  the  orders  of  the  Commission.     In 
most  other  states,  the  desired  results  would  be  secured  without  the 
necessity  of  contempt  proceedings. 

VI. 

Auditing  Department. 

AntMial    Reports. — ^This    department    has    prepared    forms    of 
annual    reports    for    all    railroads,    street    railroads,    gas,    electric, 
telephone  and  telegraph  companies.      The  railroad  reports  contain  Commissions 
the  mformation   required  by   the   Interstate   Commerce   Commission  report  published 
and  also  the  additional  information  required  by  the  Texas  Com-  onnuail}^. 
mission.     The  gas,  electric,   telephone  and  telegraph  reports  have 
been  worked  out  in  considerable  detail  and  will  be  valuable  at 
models. 

Monthly;  Reports. — Following  the  lead  of  the  Texas  Commis-  Commission 
sion,   the  Oklahoma  Commission   requires  each  month   from   each  requires  monthly 
railway  company  a  full  statement  of  earnings,  operating  expenses  ^^portsfrom 
and  tonnage  moved,  going  into  considerable  detail  as  to  segregation 


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REPORT  OF  COMMISSIONER  THELEN. 


151 


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between  state  and  interstate  traffic.     The  Commission  also  requires 

a    monthly    statement   of   the    total    tonnage    and    revenue    of    all 

commodities  moved  during  the  month. 

Organization  Reports, — The  Commission  also  required  of  each' 

railroad  subject  to  its  jurisdiction  a  special  report  containing  a  copy 

Organization  of   its  charter;     its  mortgages   and   other   agreements   atfecting   its 

reports  must  be  pj^op^j^,    minutes  of  stockholders*   meetings,   etc      These   returns 

p  ed  for  ^^^^  ^^  bound  and  are  valuable  for  reference  purposes.     The 
reference. 

Oklahoma  Street  Railway  report  is  particularly  complete. 

VII. 
Engineering  Department. 

Physical  valuation       This  department  is  working  on  the  valuation  of  the  properties 

of  properties  ^f  the  railroads  and  of  the  public  utilities  of  the  state.     As  to 

made    °°°^  ^'  ^^^  companies  is  the  material  in  final  form.     Questions 

concerning    unearned    increment,    right   of    way    multiple,    interest, 

discounts  and  commissions  have  not  as  yet  been  determined  by  the 

Conunission. 

The  department  has  prepared  a  complete  raflroad  map  of 
Oklahoma  and  is  now  preparing  detailed  maps  of  each  county. 
The  Commission  paid  about  $500.00  for  5,000  of  these  maps,  an 
onusually  low  figure. 

VIII. 
Telephone  Department. 

This  department  is  in  charge  of  Mr.  Geo.   P.   Player.     The 

telephone   companies    make    an    annual    report    and    also    monthly 

reports,  the  latter  showing  the  number  of  toll  and  residence  telephones 

Investigation  of  and  die  earnings  and  expenses  for  each  station.     Mr.  Player  is  now 

telephone  rates.  ^Qi-Jung  qq  material   for   an   investigation   by   the  Commission  of 

telephone  rates  in  the  state.  The  telephone  companies  have  returned 
to  the  Commission,  on  blanks  furnished  by  it,  a  statement  as  to  the 
physical  values  of  their  plants,  by  stations. 

There  are  over  six  hundred  telephone  companies  in  the  state, 
■lost  of  them  being  so-called  farmers*  telephone  companies.  Section 
5  of  article  IX  of  the  constitution  provides  that  all  telephone  and 


telegraph  lines  operated  for  hire  must  make  physical  connections 
with  each  other's  lines  under  such  rules  and  regulations  as  the 
Commission  may  prescribe.  This  is  a  matter  of  very  considerable 
importance.  The  Commission  forces  in  these  connections  whenever 
the  point  is  raised,  with  the  result  that  it  is  possible  to  talk  from 
the  Commission's  office  with  over  50  per  cent  of  the  farmers  of 
the  state. 


IX. 


Phyfsical 

connections 

between 

telephone 

companies 

required. 


Rate  Department. 

This  department  is  headed  by  Mr.  C.  B.  Bee,  a  very  competent 
man.      The   department   has   m   its   files   not   only    all   the   tariffs  Statistical  file  of 
affecting  Oklahoma   intrastate   business,   but   also  all   the   interstate  rate  tariffs 
tariffs  in  any  way  affecting  the  state,  both  those  issued  by  carriers   complete, 
doing   business   in   Oklahoma   and   those   issued   by   other   carriers 
concurring  in  the  rates  into  or  through  Oklahoma.      These  latter 
tariffs  are  furnished  to  the  Commission  by  the  local  railroads.     The 
Oklahoma  Commission  believes  that  its  tariffs  are  as  complete  as 
those  of  any  state  commission  in  the  country. 

The  Commission  handles  all  interstate  commerce  complaints  for 
Oklahoma  citizens,  even  filing  complaints  for  them  and  appearing 
before  the  Interstate  Commerce  Commission  without  any  expense  to 
the  complainant. 

X 

Corporation  Clerk  Department. 

This  department  receives  reports  from  all  corporations  in  the  state 
and  collects  the  license  taxes. 

XI. 

Municipal  Utilities.  Mumcipally 

1 1-  .        I  1   owned  public 

The  Commission  has  no  control  over  public  service  plants  owned  utilities  not 

or  operated  by  municipalities.      In  this  respect  it  differs  from  the   controlled  &p 

Commissions  of  Wisconsm.  Massachusetts  and  New  YorL  Commission. 


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REPORT  OF  COMMISSIONER  THELEN. 


153 


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XII. 

Gas  and  Electric  Companies. 

The  Commission's  control  over  these  companies  has  been  some- 
what  halting,  for  the  reason  that  there  is  a  question  as  to  whether 
the  constitution  as  now  worded  confers  upon  the  Commission  full 
power  of  control  over  this  class  of  corporations. 

XIII. 
Use  of  Initiative  by  Corporations. 

Attempts  to       The  "interests"  of  the  state  have  three  limes  tried  by  the  initiative 

reduce  to  repeal  a  section  of  the  constitution  forbidding  the  consolidation 

Commission  i  q£  \Q^g\  ^nd   foreign  corporations   and   substituting   a   section   very 

^^^^'  materially    reducing    the    Commission's    power.      The    Commission 

conducted  a  campaign  each  time  against  the  proposition  and  is  of 

the  opinion  that  it  has  now  finally  won  out 

Recommendations. 

From  the  observations  which  I  made  on  my  tour  of  investigation, 
I  respectfully  make  the  following  suggestions  and  recommendations 
concerning  the  regulation  and  control  of  public  service  corporations 
in  this  state: 

Service,  Equipment  and  Facilities. 

The   appointment  by   the  Railroad   Commission   of   a   sufficient 

number  of  expert  inspectors  to  inspect  the  physical  condition  of  all 

Appointment  of  tracb,  stations,  plants  and  other  facilities  and  equipment  of  all  the 

expert  inspectors,  public   service   corporations   of   the   state;     also   to   render   reports 

constantly  as  to  the  quality  and  sufficiency  of  the  service  rendered 
to  the  public 

Stock  and  Bond  Law. 

Control  of      The  determination  by  the  Railroad  Commission  of  the 
issuance  of  amount  of  stocks,  bonds,  notes   and  other  evidences  of 
securities,  indebtedness,   that  public  service   corporations  may   issue 
and  the  conditions  of  the  issue. 


Department  of  Statistics  and  Accounts. 

The  establishment  by  the  Railroad  Commission  of  a  department  Collection  of 
of  statistics  and  accounte  for  the  purpose  of  working  out  a  uniform  complete 
system  of  accounte  for  the  different  public  service  corporations  of  ^^^^^^     <^^' 
the   state,    of    analyzing   and    digesting   their    annual    reporte,    and 
furnishing  to   the  Commission   financial   and  other   statistical    data 
whenever  needed. 

Public  Utilities. 

Adequate    control    by    ihc    Railroad    Commission,    under    the  Control  of  public 

constitution  as  recently  amended,  of  rates,  service,  equipment,  stocb  utilities  as  to 
,  ,       1  ,  r  1    .  •  ^  »  1    L^-- .    rates,  service, 

and  bonds,  and  accounte  of  gas.  electric,  water,  power,  telephone,  ^^^-p^g^^  ^„j 

telegraph  and  street  railway  companies,   and  other  public  utilities,  facilities. 

including  the  power  to  compel  physical  connections  between  telephone 

companies. 

Property  Valuation. 

The  extension  of  the  power  of  the  Railroad  Commission  in  Ae  Poiper  to  ascertain 
matter  of   ascertaining   the  value  of   the   property   engaged  in   the  J^';^^'j^'^ 
public  service  from  railroads  to  all  other  public  service  corporations  ^    P^^P^^  y- 
subject  to  ite  jurisdiction. 

Public  Safety. 

The  adoption  of  adequate  means  to  secure  public  safety,  par-  Control  of  grade 
ticularly  with  reference  to  grade  crossings  between  railroads  and  ^^^^S^- 
highways,  or  two  or  more  railroads. 

Interstate  Commerce  Complaints. 

The   protection   of   the   people   of   California   in   tfie  matter   of  Represent  people 
interstate  commerce  rates,   where  any  considerable  portion  of   f^t  ^f^re  hterstate 
shippers  of  the  state  are  affected.     The  Railroad  Commission  should  ^^^^^^^^^-^^ 
appear  in  such  cases  before  the  Interstate  Commerce  Commission. 

Court  Proceedings. 

The  modification  of  existmg  statutes  so  as  more  adequately  to  Prompt  settlement 
protect  the   Railroad  Commission   from   the   great  delays  incident «/ /«'fa*ga^'on. 
to  court  proceedings  in  many  other  jurisdictions  and  for  the  pro- 
tection of  the  public  in  the  interim. 


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Accidents. 

Immediate      The    establishment    of    a    system    for    immediate    notice    to    the 
imesiigaiion  of  Railroad   Commission   of   accidents   and   for   examination   into   the 
acctdents.  ^^^^  \yy  ^^  Commission's  inspectors  and  recommendations  by  them 
as  to  means  of  prevention. 

Co-operation. 

FormaHonof      Between    the    State     Railroad   Commission    and     the    Interstate 

Pacific  Coast  Commerce  Commission  and  constant  correspondence  with  other  State 

^^'^^<^^^  Commissions.      Also   the   formation  of   a   Pacific   Coast   Railroad 

^commissioners  Co^njisjioncrs*  Association,  to  consist  of  the  Commissions  of  Oregon. 

*  Washington,  Nevada  and  California,  for  the  purpose  of  frequent 

consultation  and  concerted  action  on  problems  of  mutual  interest 

Respectfully  submitted. 

Max  Thelen. 

Attorney  for  Railroad  Commission  of  State  of  California. 
Dated.  San  Francisco.  Cal..  October.   1911. 


1/ 


Assembly  Constitutional  Amendment 

No.  50. 


A  Resolution  to  Propose  to  the  People  of  the  State 
OF  California  an  Amendment  to  Sections  Twenty 
AND  Twenty-one  of  Article  Twelve  of  the  Con- 
stitution OF  THE  State  of  California  Relating 
TO  Railroads  and  Other  Transportation  Companies. 

[Adopted  March  24,   1911.] 

The  legislature  of  the  State  of  California  at  its  regular  session 
commencing  on  the  second  day  of  January,  one  thousand  nine 
hundred  and  eleven,  two-thirds  of  all  the  members  elected  to  each 
of  the  two  houses  of  said  legislature  voting  in  favor  thereof  hereby 
proposes  the  following  amendment  to  article  12  of  the  Constitution 
of  the  State  of  California. 

First  Section  20  of  Article  12  it  hereby  amended  to  read 
at  follows: 


Railroad  rates 
ma^  not  he  raised 
n^iihout  approval 
of  Commission. 


Sec.  20.  No  railroad  or  other  transportation  company  shall 
raise  any  rate  of  charge  for  the  transportation  of  freight  or 
passengers  or  any  charge  connected  therewith  or  incidental  thereto, 
under  any  circumstances  whatsoever,  except  upon  a  showing  before 
the  railroad  commission  provided  for  in  this  constitution,  that  such 
mcrease  is  justified,  and  the  decision  of  the  said  commission  upon 
the  showing  so  made  shall  not  be  subject  to  review  by  any  court 
except  upon  the  question  whether  such  decision  of  the  commission 
will  result  in  confiscation  of  property. 

Second.     Section  21   of  Article  12  is  hereby  amended  to  read  pi^Hfoads  ma\f 

as  foUowi:  not  discriminate 

-    -. .      ,  in  charges  or 

Sec.  21.     No  discrimination  m  charges  or  facilities  tor  trans-  facilities  or 

portation  shall  be  made  by  any  railroad  or  other  transportation  between  places 
company  between  places  or  persons,   or   m  the   facilities   for   the  or  persons. 


Decision  of 
Commission  not 
subject  to  review, 
except  . 


\ 

I 


». 


} 


156 


LOUIS  SLjOSS  &  CO. 


transportation  of  the  same  classes  of  freight  or  passengers  within 
this  state.  It  shall  be  unlawful  for  any  railroad  or  other  trans* 
portation  company  to  charge  or  receive  any  greater  compensation 
in  the  aggregate  for  the  transportation  of  passengers  or  of  like  kind 
of  property  for  a  shorter  than  for  a  longer  distance  over  the  same 
line  or  route  in  the  same  direction,  the  shorter  being  included  within 
the  longer  distance,  or  to  charge  any  greater  compensation  at  a 
through  rates  than  the  aggregate  of  the  intermediate  rates. 

Provided^  hoipever,  that  upon  application  to  the  railroad  com- 
mission provided  for  in  this  constitution  such  company  may,  in 
special  cases,  after  investigation,  be  authorized  by  such  commission 
to  charge  less  for  longer  than  for  shorter  distances  for  the  trans- 
portation of  persons  or  property  and  the  railroad  commission  may 
from  time  to  time  prescribe  the  extent  to  which  such  company  may 
be  relieved  from  the  prohibition  to  charge  less  for  the  longer  than 
for  the  shorter  haul.  Tlie  railroad  commission  shall  have  povftr  to 
authorize  the  issuance  of  excursion  and  commutation  tickets  at 
special  rates. 

Nothing  herein  contained  shall  be  construed  to  prevent  the  rafl- 
road  commission  from  ordering  and  compelling  any  railroad  or  other 
transportation  company  to  make  reparation  to  any  shipper  on 
account  of  the  rates  charged  to  said  shipper  being  excessive  or 
discriminatory,  provided  no  discrimination  will  result  from  such 
reparation. 


Long  and  short 
hauls  regulated. 


Exceptions  in 

special  cases  to 

he  approved  b^ 

Commission, 


Commission  majf 

order  reparation 

lo  shippers. 


I 


Assembly  Constitutional  Amendment 

No.  6. 


A  Resolution  Proposing  to  the  People  of  the  State 
OF  California  an  Amendment  to  Section  Twenty- 
two  OF  Article  Twelve  of  the  Constitution  of 
THE  State  of  California  Creating  a  Railroad 
Commission  and  Defining  Its  Powers  and  Duties. 

[Approved  March  24,   1911.] 

The  legislature  of  the  State  of  California,  at  iu  regular  session, 
commencing  on  the  second  day  of  January,  one  thousand  nine 
hundred  and  eleven,  two-thirds  of  all  the  members  elected  to  each 
of  the  two  houses  of  said  legislature  voting  in  favor  thereof,  hereby 
proposes  to  the  people  of  the  State  of  California  that  Section  22 
of  Article  12  of  die  Constitution  of  the  State  of  California  be 
amended  so  as  to  read  as  follows: 

Sec.  22.  There  is  hereby  created  a  railroad  commission  which 
shall  consist  of  five  members  and  which  shall  be  known  as  the 
railroad  commission  of  the  State  of  California.  The  commission 
shall  be  appointed  by  the  governor  from  the  state  at  large;  provided, 
that  the  legislature,  in  its  discretion,  may  divide  the  state  into 
districts  for  the  purpose  of  such  appointments,  said  districts  to  be 
as  nearly  equal  in  population  as  practicable;  and  provided  further 
that  the  three  conunissioners  in  office  at  the  time  this  section  takes 
effect  shall  serve  out  the  term  for  which  they  were  elected,  and 
that  two  additional  commissioners  shall  be  appointed  by  the  governor 
immediately  after  the  adoption  of  this  section,  to  hold  office  during 
the  same  term.  Upon  the  expiration  of  said  term,  the  term  of 
office  of  each  commissioner  thereafter  shall  be  six  years,  except 
the  commissioners  first  appointed  hereunder  after  such  expiration, 
one  of  whom  shall  be  appointed  to  hold  office  until  January  1. 
1917,  two  until  January  1,  1919,  and  two  until  January  1,  1921. 
Whenever  a  vacancy  in  the  office  of  commissioner  shall  occur,  the 


Creation  of 
Railroad 
Commission  of 
/rve  members 
to  be  appointed. 


Districts, 


Term  of  ofice 
six  }fears. 


:l 


'$ 


Si 


I; 


^ilW 


ill 


158 


LOUIS  SLOSS  &  CO. 


Governor  to 
fill  vacancies. 


Removal  of 
Commissioners. 

Disqualifica  tions. 


Orders  effective 

upon  approval 

of  majority. 


Powers  of 

Commission 

to  establish 

rates. 


governor  shall  forthwith  appoint  a  qualified  person  to  fill  the  same 
for  the  unexpired  term.  Commissioners  appointed  for  regular  terms 
shall,  at  the  beginning  of  the  term  for  which  they  are  appointed, 
and  those  appointed  to  fill  vacancies,  shall,  immediately  upon  their 
appointment,  enter  upon  the  duties  of  their  offices.  The  legislature 
shall  fix  the  salaries  of  the  commissioners,  but  pending  such  action 
the  salaries  of  the  commissioners,  their  officers  and  employees  shall 
remain  as  now  fixed  by  law.  The  legislature  shall  have  the 
power,  by  a  two-thirds  vote  of  all  members  elected  to  each  house, 
to  remove  any  one  or  more  of  said  commissioners  from  office  for 
dereliction  of  duty  or  corruption  or  incompetency.  All  of  said  com- 
missioners shall  be  qualified  electors  of  this  state,  and  no  person 
in  the  employ  of  or  holding  any  official  relation  to  any  person,  firm 
or  corporation,  which  said  person,  firm  or  corporation  is  subject 
to  regulation  by  said  railroad  commission  and  no  person  owning 
stock  or  bonds  of  any  such  corporation  or  who  is  in  any  manner 
pecuniarily  interested  therein,  shall  be  appointed  to  or  hold  the  office 
of  railroad  commissioner.  No  vacancy  in  the  commission  shall 
impair  the  right  of  the  remaining  commissioners  to  exercise  all  the 
powers  of  the  commission.  The  act  of  a  majority  of  the  commis^ 
sioners  when  in  session  as  a  board  shall  be  deemed  to  be  the  act 
of  the  commission;  but  any  investigation,  inquiry  or  hearing  which 
the  commission  has  power  to  undertake  or  to  hold  may  be  under- 
taken or  held  by  or  before  any  commissioner  designated  for  the 
purpose  by  the  conmiission.  and  every  order  made  by  a  commissioner 
so  designated,  pursuant  to  such  inquiry,  investigation  or  hearing, 
when  approved  or  confirmed  by  the  commission  ordered  filed  in  its 
office,  shall  be  deemed  to  be  the  order  of  the  commission. 

Said  commission  shall  hav^  the  power  to  establish  rates  of 
charges  for  the  transportation  of  passengers  and  freight  by  rail- 
roads and  other  transportation  companies,  and  no  railroad  or 
other  transportation  company  shall  charge  or  demand  or  collect  or 
receive  a  greater  or  less  or  di^erent  compensation  for  such  trans- 
portation of  passengers  or  freight,  or  for  any  service  in  connection 
therewith,  between  the  points  named  in  any  taritf  of  rates,  established 
by  said  commission  than  the  rates,  fares  and  charges  which  are 
specified   in   such   tariff.      The   commission   shall   have   the   further 


Ti 


ASSEMBLY  CONSTITUTIONAL  AMENDMENT  No.  6. 


159 


power  to  examine  books,  records  and  papers  of  all  railroad  and  To  examine 

other  transportation  companies;    to  hear  and  determine  complaints  records. 

against    railroad    and    other    transportation    companies;      to    issue 

subpoenas    and   all    necessary   process    and   send    for   persons    and  To  control 

papers;    and  the  commission  and  each  of  the  commissioners  shall /^cimies  ana 

have  the  power  to  administer  oaths,  take  testimony  and  punish  for  *^'^'^*^* 

contempt  in  the  same  manner  and  to   the  same  extent  as  courts 

of   record ;     the   commission   may   prescribe   a   uniform  system    of  To  enforce  orders. 

accounts    to    be    kept    by    all     railroad    and    other    transportation 

companies. 

No  provision  of  this  constitution  shall  be  construed  as  a  limitation  Additional 
upon  the  authority  of  the  legislature  to  confer  upon  the  railroad  porvers. 
conmiission  additional  powers  of  the  same  kind  or  different  from 
those  conferred  herein  which  are  not  inconsistent  with  the  powers 
conferred  upon  the  railroad  commission  in  this  constitution,  and  the 
authority  of  the  legislature  to  confer  such  additional  powers  is 
expressly  declared  to  be  plenary  and  unlimited  by  any  provision  of 
this  constitution. 

The  provisions  of  this  section  shall  not  be  construed  to  repeal 
in  whole  or  in  part  any  existing  law  not  inconsistent  herewith, 
and  the  "Railroad  Commission  Act"  of  this  state  approved  Railroad 
February  10,  1911,  shall  be  construed  with  reference  to  *!*»  ^^^^T/p^/ 
constitutional  provision  and  any  other  constitutional  provision 
becoming  operative  concurrently  herewith.  And  the  said  act  shall 
have  the  same  force  and  effect  as  if  the  same  had  been  passed 
after  the  adoption  of  this  provision  of  the  constitution  and  of  all 
other  provisions  adopted  concurrently  herewith,  except  that  the 
three  commissioners  referred  to  in  said  act  shall  be  held  and 
construed  to  be  the  five  conmiissioners  provided  for  herein. 


!(■ 


i(   • 


Senate  Constitutional  Amendment 

No.  47. 


A  Resolution  Proposing  to  the  People  of  the  State 
OF  California  an  Amendment  to  Section  Twenty- 
three  OF  Article  Twelve  of  the  Constitution  of 
THE  State  of  California,  to  Confer  Upon  the 
Railroad  Commission  Power  and  Jurisdiction  to 
Regulate  and  Control  the  Business  of  Furnishing 
Certain  Commodities  and  Performing  Certain 
Services  to  or  for  the  Public. 

[Adopted  March  28.  1911.] 

The  Legislature  of  the  State  of  California,  at  its  regular  session, 
commencing  on  the  second  day  of  January,  one  thousand  nine 
hundred  and  eleven,  two-thirds  of  all  the  members  elected  to  each 
of  the  two  houses  of  said  Legislature  voting  in  favor  thereof,  hereby 
proposes  to  the  people  of  the  State  of  California  that  Section 
23  of  Article  12  of  the  Constitution  of  the  State  of  California 
be  amended  so  as  to  read  as  follows: 

Sec.  23.  Every  private  corporation,  and  every  individual  or 
Association  of  individuals,  owning,  operating,  managing,  or  controlling 
any  commercial  railroad,  inlerurban  railroad,  street  railroad,  canal, 
pipe  line,  plant,  or  equipment,  or  any  part  of  such  railroad,  canal. 
pipe  line,  plant  or  equipment  within  this  sUtc.  for  the  transportation 
or  conveyance  of  passengers,  or  express  matter,  or  freight  of  any 
kind,  including  crude  oil.  or  for  the  transmission  of  telephone  or 
telegraph  messages,  or  for  the  production,  generation,  transmission, 
delivery  or  fumishmg  of  heat,  light,  water  or  power  or  for  the 
furnishing  of  storage  or  wharfage  facilities,  either  directly  or 
mdirectly.  to  or  for  the  public,  and  every  common  carrier,  is 
hereby  declared  to  be  a  public  utility  subject  to  such  control  and 
regulation  by  the  railroad  conunission  as  may  be  provided  by  the 
legislature,  and  every  class  of  private  corporations,  individuals,  or 


Public  Utilities 
defined  h^ 
comiiiulional 
amendment  and 
placed  under 
control  of 
Commission. 


i.' 


<' 


v 


lit 


•*  ••  — 


ii 


I  I 


162 


LOUIS  SLOSS  &  CO. 


Porvers  of 

Commission 

plenary. 


Powers 

respecting  public 

utilities  vested 

in  Board  of 

Supervisors  to 

cease. 


Except 


Procedure 

under  which 

municipalities 

may  retain 

control. 


associations  of  individuals  hereafter  declared  by  the  legislature  to 
be  public  utilities  shall   likewise  be   subject  to   such   control   and 

regulation. 

The  railroad  commission  shall  have  and  exercise  such  power 
and  jurisdiction  to  supervise  and  regulate  public  utilities,  m  die 
State  of  California,  and  to  fix  the  rates  to  be  charged  for 
commodities  furnished,  or  services  rendered  by  public  uUliti«»  as 
shall  be  conferred  upon  it  by  the  legislature,  and  the  nght  of  the 
legislature  to  confer  powers  upon  the  railroad  commission  respectmg 
public  utilities  is  hereby  declared  to  be  plenary  and  to  be  unlmi- 
ited  by  any  provision  of  this  constitution. 

From   and   after   the  passage   by   the  legislature   of   laws   con- 
ferring   powers    upon    the    railroad    commission    respectmg    public 
utilities,  all  powers  respecting  such  public  utilities  vested  m  boards 
of   supervisors,    or   municipal   councils,    or   other   govemmg  bodies 
of  the  several  counties,  cities  and  counties,  cities  and  towns,  m  this 
sUte    or  in  any  commission  created  by  law  and  exisUng  at  the 
timc'of  the  passage  of  such  laws,  shall  cease  so  far  as  such  powers 
shall    conflict   with    the    powers    so    confened    upon    the    railroad 
commission;    pn^ided,  however,   that  this  section  shall  not  affect 
such  powers  of  control  over  any  public  utility  vested  m  any  al^ 
and  county,  or  incorporated  city  or  town  as.  at  an  election  to  be 
held  pursuant  to  laws  to  be  passed  hereafter  by  the  legislature,  m 
majority  of  the  qualified  electors  voHng  thereon  of  such  city  and 
county,  or  incorporated  city  or  town.  shaU  vote  to  retom.  and  unbl- 
such  election  such  powers  shall  continue  unimpaired;    but  it   the 
vote  so  taken  shall  not  favor  the  continuation  of  such  powers  they 
shall  thereafter  vest  in  the  railroad  commission  as  provided  by  law; 
and  provided,   further  that   where   any   such  city   and   county   or 
incorporated  city  or  town  shall  have  elected  to  continue  any  powers 
respecting  public  utilities,  it  may.  by  a  vote  of  a  majority  of  it. 
qualified   electon  voting  thereon,   thereafter  sunender   such  powers 
to  the  railroad  commission  in  the  manner  to  be  prescribed  by  the 
legislature;    or  if  such  municipal  corporation  shall  have  surrendered 
any  powers  to  the  railroad  commission,  it  may,  by  like  vote,  there- 
after  reinvest  itself  with  such  power. 

Nothing  in  this  section  shall  be  construed  as  a  limitation  upon 
any  power  conferred  upon  the  railroad  commission  by  any  provision 
of  this  constitution  now  existing  or  adopted  concurrenUy  herewith. 


Public  Utilities  Election  Act. 


An  Act  to  Provide  for  Submitting  to  the  Qualified 
Electors  of  Every  City  and  County,  or  Incor- 
porated City  or  Town,  in  This  State  the  Question 
Whether  Such  City  and  County,  or  Incorporated 
City  or  Town.  Shall  Retain  the  Powers  of 
Control  Vested  Therein  Respecting  All  or  Any 
Public  Utilities,  and  Providing  Further  for 
Elections  Thereafter  to  Surrender  Such  Powers 
in  Case  the  Qualified  Electors  of  Any  Such  City 
AND  County,  or  Incorporated  City  or  Town,  Shall 
Have  Voted  to  Retain  Such  Powers  or  to  Reinvest 
Such  City  and  County,  or  Incorporated  City  or 
Town.  With  Such  Powers,  in  Case  the  Qualified 
Electors  Thereof  Have  Voted  to  Surrender 
Such  Powers. 

[Approved  January  2,   1912.] 

The  people  of  the  State  of  California  do  enact  as  follows: 

Section  1.  Any  city  and  county,  or  incorporated  city  or 
town,  may  retam  its  powers  of  control  vested  therein  respecting 
any  one  or  more  classes  of  public  utilities  and  may  thereafter 
surrender  such  powers  to  the  Railroad  Commission  of  the  State  of 
California,  hereinafter  called  the  Railroad  Commission,  or  may 
reinvest  itself  with  such  powers  as  it  may  have  surrendered  to  the 
Railroad  Commission,  all  as  in  this  act  provided. 

Sec.  2.     The  term  "municipal  corporation.**  as  used  in  this  act,  *^Mumcipal 

shall  be  construed  to  mean  a  city  and  county,  or  an  incorporated  corporation* 

city  or  town.     The  term  "legislative  body,**   as  used  in  this  act,  defined. 

shall   be   construed   to  mean   the   board  of   supervisors,   municipal  ** Legislative 

council,    commission  or   other  legislative  or   governing  body   of   a  Body*  defined. 
municipal  corporation. 


Municipalities 
may  retain,  may 
surrender  or  may 
reinvest 

themselves  with 
control  of  public 
utilities. 


f    ^— *-     **     -..  _^i— -  .  9'    >»fcA^M_^^f* 


164 


LOUIS  SLOSS  6c  CO. 


Oih^  terms  Sec.  3.  The  terms  "raflroacl  corporation."  "street  railroad 
defined,  corporation/*  "common  carrier,"  "gas  corporation."  "electrical 
corporation,"  "water  corporation."  "telephone  corporation,"  "tele- 
graph corporation,"  "wharfinger,"  "warehouseman"  and  "pubHc 
utility."  as  used  in  this  act,  shall  severally  have  the  same  meaning 
as  is  given  to  them,  respectively,  in  section  2  of  the  act  known  as 
the  "Public  UtUities  Act" 


When  and  hoVf 

question  of 

control  may  be 

submitted  to  the 

people. 


Ten  per  cent  of 

qualified-electors 

must  sign 

petition. 

Form  of 
petition. 


Filing  of 
petition. 


}  S 


Sec.  4.     The  question  whether  any  municipal  corporation  shall 
retain  its  powers  of  control  respecting  one  or  more  classes  of  public 
utilities  may  be  submitted  to  the  qualified  electors  of  such  municipal 
corporation,  as  provided  in  this  act,  either  at  a  general  municipal 
election  or  at  a  special  election  held  therein.     Such  question  may 
be  so  submitted,  either  in  pursuance  of  an  ordinance  of  intention 
adopted  by  a  vote  of  three-fifths  of  all  the  members  of  the  legislative 
body    of    such    municipal    corporation,    declaring    that    the    public 
mterest  requires  the  submission  of.  and  that  it  is  the  intention  of 
such   legislative  body  to  submit,   such  question   to   a  vote  of  the 
qualified  electors  of   such  municipal   corporation,   or  in  pursuance 
of  a  petition  of  qualified  electors  of  such  municipal  corporation,  as 
hereinafter  provided.     Such  ordinance  of  intention  or  such  petition. 
as  the  case  may  be,  shall  contain  the  propositions  proposed  to  be 
io  submitted,  as  set  forth  in  section  6  of  this  act.     Such  petition 
shall  be  signed  by  qualified  electors  of  such  municipal  corporation, 
equal    in   number   to   ten   per   centum   of    such   qualified   electors, 
computed  upon  the  total  number  of  votes  cast  in  such  municipal 
corporation   for  all   candidates   for   governor  at  the  last  preceding 
general   election   prior   to   the    filing   of   such   petition   at   which   a 
governor  was  elected.    Such  petition  may  consist  of  separate  papers; 
provided^  that  if  any  paper  consists  of  more  than  one  sheet,  it  shall 
be  securely  fastened  together  at  the  top.     The  signatures  need  not 
all  be  appended  to  one  sheet  or  paper.     Each  such  paper  shall 
have  attached  thereto,  at  the  bottom  of  the  last  sheet  thereof,  the 
affidavit  of  a  qualified  elector  of  such  municipal  corporation,  stating 
diat  all  of  the  signatures  on  each  sheet  thereof  were  made  in  his 
presence,   and  that  to  the  best  of  his  knowledge  and  belief  each 
signature  is  the  genuine  signature  of  the  person  whose  name  purports 
to   be  thereto  subscnbed.      Such  petition   shall  be   filed   with   die 


PUBUC  UTIUTIES  ELECTION  ACT. 


165 


clerk  of  the  legislative  body  of  such  municipal  corporation.     Within 
ten  days  from  the  date  of  the  filing  of  such  petition,   said  clerk 
shall   examine   the  petition   and   ascertain   from   the   record   of   the 
registration  of  the  electors  of  the  city  and  county,  or  of  the  county 
in  which  such  municipal  corporation  is  situated,  whether  the  petition 
is  signed  by  the  requisite  number  of  the  qualified  electors  of  such 
municipal   corporation;     and  if   requested   by   said   clerk,   the  said 
legislative  body  of  said  municipal  corporation  shall   authorize  him 
to  employ  persons  specially  to  assist  him  in  the  work  of  examining 
such  petition  and  shall  provide  for  their  compensation.     Upon  the 
completion  of  such  examination,  said  clerk  shall  forthwith  attach  to 
said  petition  his  certificate,  properly  dated,   showing  the  result  of 
such  examination.     If  from  such  examination,  said  clerk  shall  find 
that  said   petition   is   signed  by   the   requisite   number   of   qualified 
electors,  he  shall  certify  that  the  same  is  sufficient;    but  if.   from 
such  examination,  he  shall  find  that  said  petition  is  not  signed  by 
such  requisite  number  of  qualified  electors,  he  shall  certify  to  the 
number  of  qualified  electors  signing  such  petition  and  to  the  number 
of  qualified  electors  required  to  make  such  petition  sufficient.     If  by 
the  certificate  of  said  clerk  the  petition  is  shown  to  be  insufficient, 
it  may  be   amended   by   filing   a   supplemental   petition   within   ten 
days   from  the  date  of  such  certificate.     Said  clerk  shall,  within 
ten  days  from  the  filing  of  such  supplemental  petition,  make  like 
examination  of  the  same  and  certify  to  the  result  of  such  examination 
as  hereinbefore  provided.     If  the  certificate  of  the  clerk  shall  show 
any  such  petition,  or  any  such  petition  together  with  a  supplemental 
petition,  to  be  insufficient,  it  shall  be  retained  by  him  and  kept  as 
a  public  record,  without  prejudice,  however,  to  the  filing  of  a  new 
petition  to  the  same  etfect.     But  if.  by  the  certificate  of  the  clerk, 
such  petition,  or  such  petition  together  with  a  supplemental  petition, 
is  shown  to  be  sufficient,  the  clerk  shall  forthwith  present  the  same 
to    the    legislative    body    of    such    municipal    corporation.       The 
sufficiency  or  insufficiency  of  such  petition  shall  not  be  subject  to 
review    by    such    legislative    body.      After    the    election    held    in 
pursuance  of  such  petition,  the  sufficiency  of  such  petition  in  any 
respect   shall   not   be   subject   to   judicial   review    or   be   otherwise 
questioned.      In  any  city  and  county  having  a  board  of  election 
commissioners  and  a  registrar  of  voters,  the  clerk  of  the  legislative 


Identification  of 
signatures. 


I 


Petitions  to  be 
certified. 


Supplementary^ 
petitions. 


NeiP  Petitions, 


i\ 


LOUIS  SLOSS  &  CO. 


PUBUC  UnUTIES  ELECTION  ACT. 


167 


bo<Jy  thereof  .h.U  inunedialely  upon  the  filing  of  any  pet.t.on  wiA 
him.  tran«nit  the  same  to  .uch  board  of  election  comm.«.oner..  who 
Aall  forthwith  deliver  .uch  petition  to  «id  regUtrar  of  voter.,  who 
Aall  perform  all  the  dutie.  herein  required  to  be  performed  m  oAer 
municipal  corporation,  by  the  clerk  of  the  leg»latjve  body  ther^f. 
,e.pecting  the  examination  and  certification  of  .uch  petition.     Such 
^g^ar   of   voter,   Aall.    upon   making   hU   cerffic.te.    forthwith 
reL  .aid  petition  to  «id  clerk,  who  Aall  thereupon  pre.ent  ^ 
petition  and  the  certificate  thereto  atUched  to  Ae  leg»laUve  body 
of  .uch  municipal  corporation  a,  hereinbefore  in  th»  .ection  provided 
Special  e/ec,.W      Sec.  5.     Upon  the  adoption  of  ,uch  ordinance  of  mte^Uc«.  or 
Liet  ihcAct.  Ae  pre.entation  a.  afore»id  of  ,uch  peUtion   a,  provided  m«cbon 
4  of  thi.  act.  the  legislative  body  of  «.ch  municipal  c<»PO'«t»n 
A.11.  by  ordinance,  order  the  holding  of  a  .pecial  elecUon  for  Ae 
purp;^  of  .ubmitting  to  the  qualified  elector,  of  .uch  municW 
L^ation  the  proportion.  ,et  forth  in  •-»>  ordinance  "f  mtntion 
or  b  .uch  petition,  a.  the  ca«  may  be.  which  propo..tion    rfiaUbe 
Ao«  «t  forth  in  .ection  6  of  thU  act.  or  .uch  legulatwe  body 
Aall.  by  ordinance,  order  the  .ubmi«ion  of  .ud.  proportion,  at  . 
^neial  municipal  elecUon.   a.  hereinafter  provided.      Such  .peciJ 
election  Aall  be  held  not  leM  than  twenty  day.  no,  more  than 
.aty  day,  after  the  adoption  of  the  ordinance  of  mtentjon  provided 
for  in  ,ection  4  of  thU  act.  or  the  pre^ntation  of  .uch  petition  to 
«id  legislative  body:   proWJeJ.  that  if  a  general  municW  e^ect»n 
.hall  occur  in  »id  municipal  corporation  not  lew  than  twenty  day. 
nor  more  than  .ixty  day.  after  the  adoption  of  «id  o'd"'"!'"^ 
intention   or   the   pre«nUtion   of   »id   petiUon   to   ».d   legi,la^ 
body.  «id  proposition,  may  be  ,ubmitled  at  .uch  general  municipal 
election,  in  the  .ame  manner  a,  other  proposition,  are  required  by 
law  to  be  .ubmitted  at  general  municipal  election,  in  .uch  municipal 
corporation.      Every   .pecial   election   held   in   any   municipal   cor- 
poTtion  under  the  provUion.  of  thi.  act.  .haU  be  called  by  Ae 
Ugi,lative   body   thereof,   by   ordinance,   which   Aall    .pecf y   the 
p^position.  to  be  submitted  at  .uch  electK,n  and  the  date  thereof 
and    where  provi.ion  U  not  otherwise  made  by  law.  .hall  e,tabl»h 
Ae    election    precinct,    therefor    and    dcignate    the    polling    plac^ 
therein,  and  the  name,  of  the  election  officer,  for  each  .uch  precmct. 


Such  ordinance  .hall,  prior  to  «ich  election,  be  publiAed  five  time,  '^"^Jj^^^"^"  °^ 

in   a  daily   newjpaper  printed   and   published   m   ,uch   municipal 

corporation,  or  twice  b  a  weekly  new,paper  printed  and  publi,hed 

therein,  if  there  be  no  .uch  daily  newspaper;    provided,  that  if  no 

such  daily  or  weekly  new,paper  be  printed  and  published  in  ,uch 

municipal  corporation,  the  clerk  of  ,aid  legislative  body  shall  post 

a  copy  of  .aid  ordinance  in  three  public  place,  in  .uch  municipal 

corporation  at  least  ten  days  prior  to  such  election.    The  proposition. 

Mibmitted  under  thi.  action  at  any  general  municipal  election  or  at 

any  special  election  shall  be  the  same  as  tho«  tel  forth  in  action  6 

of  thi.  act 

Sec.  6.    The  ballot,  to  be  uwd  at  any  general  municipal  election  '^'J''*  "^^  tofeLn 
or   at   any   q>ecial   election,    at  which   i.  .ubmitted   tfie   question  *  ^"^ '"" 
whether  a  municipal  corporation  shall  reUin  ite  power,  of  control 
respecting  public  utilities  shall  have  printed  thereon,  in  addition  to 
the  other  matter,  required  by  law,  the  following  proportion. : 

"Proposition  No.  1.     Shall   (name  of 

municipal  corporation)    retam  it,  power,  of  control  over  railroad 
corporation,?" 

"Proposition  No.  2.     Shall (name  of 

municipal  corporation)  reUin  it,  power,  of  control  over  .treet  rail- 
road corporation.)" 

"Propo.ition  No.  3.     Shall   (name  of 

municipal   corporation)    retain  ite  power,  of  control   over  common 
carrier,  other  than  railroad  and  .treet  railroad  corporations?" 

"Proposition  No.  4.     Shall   (name  of 

municipal  corporation)   retain  ite  power,  of  control  over  ga.  cor- 
porations?" 

"Proposition  No.  5.     Shall   (name  of 

municipal  corporation)   retain  ite  powers  of  control  over  electrical 
corporations?" 

"Proposition  No.  6.     Shall   (name  of 

municipal  corporation)  retain  ite  power,  of  control  over  telephone 
corporation,? 


i 


168 


LOUIS  SLOSS  &  CO. 


1 1 


''Proposition  No.  7.     Shall (name  of 

municipal  corporation)  retain  its  powers  of  control  over  telegraph 
corporations?*' 

"Proposition  No.  8.     Shall (name  of 

municipal  corporation)  retain  its  powers  of  control  over  water 
corporations?" 

"Proposition  No.  9.     Shall    (name  of 

municipal  corporation)  retain  its  powers  of  control  over  wharf- 
ingers?" 

"Proposition  No.  1 0.     Shall (name  of 

municipal  corporation)  retain  its  powers  of  control  over  ware- 
housemen?" 

Imtucixom  to  Opposite  each  such  proposition  to  be  voted  upon,  and  to  the 
yfotcfi.  right  thereof,  the  words  "Yes"  and  "No"  shall  be  printed  on 
separate  lines,  with  voting  squares.  Any  voter  desiring  to  vote 
in  favor  of  the  retention  of  the  powers  of  control  of  such  municipal 
corporation  respecting  any  particular  class  of  public  utility,  shall 
stamp  a  cross  (X)  in  the  voting  square  after  the  printed  word 
**Yes"  opposite  the  proposition  as  to  such  class,  and  any  voter 
desiring  to  vote  agamst  the  retention  of  such  powers  of  such 
municipal  corporation  respecting  any  particular  class  of  public 
utility,  shall  stamp  a  cross  (X)  in  the  voting  square  after  Ae 
printed  word  "No"  opposite  such  proposition. 

Camassmg       Sec.   7.     If  die  propositions  specified  in  section  6  of  this  act 
tUction  Tciurm,  shall  have  been  submitted  at  a  special  election  in  any  municipal 

corporation,  then  the  legislative  body  or  other  body  or  board 
charged  with  the  duty  of  canvassing  the  returns  and  declaring  the 
result  of  elections  in  such  municipal  corporation,  shall  meet  at  their 
usual  place  of  meeting  on  the  first  Monday  after  such  election  to 
canvass  the  returns  and  declare  the  result  thereof.  Immediately  upon 
the  completion  of  such  canvass,  or  upon  the  completion  of  the 
canvass  of  the  returns  of  any  general  municipal  election  at  which 
such  propositions  shall  have  been  submitted,  such  legislative  body  or 
other  body  or  board  charged  with  said  duty  shall  make  an  order 
declaring  the  result  of  the  election  upon  such  propositions  and  shall 


PUBUC  UTIUTIES  ELECTION  ACT. 


169 


Result  of 
election  to  retain. 


cause  the  same  to  be  entered  upon  its  minutes,  which  order  shall 
show  the  total  number  of  votes  cast  upon  each  such  proposition, 
and  the  number  of  votes  cast  respectively  in  favor  of  and  against 
each  such  proposition.     If  it  shall  appear  from  the  result  of  such 
election,  as  so  declared,  that  a  majority  of  the  qualified  electors  of 
such  municipal  corporation  voting  on  any  proposition  submitted,  as 
provided  in  section  5   of  this  act,  shall  have  voted  to  retain  the 
powers   of   control   of   such   municipal   corporation    respecting   any 
particular  class  of  public  utility,  such  municipal  corporation  shall 
be  deemed  to  have  elected  to  retain  such  powers  of  control  respect- 
ing such  class  of  public  utility,  and  such  powers  shall  be  exercised 
by  such  municipal  corporation  until  the  same  may  be  surrendered 
as  hereinafter  provided;    and  if  it  shall  appear  from  the  result  of 
such  election,   as  so   declared,   that  a  majority  of  such  qualified 
electors  so  voting  on  any  such  proposition  shall  have  voted  not  to 
retain  such  powers  respecting  any  class  of  public  utility,  such  munic- 
q>al   corporation   shall   be   deemed   to   have  elected   not   to   retain 
such  powers  of  control  respecting  such  class  of  public  utility,  and 
such  power  of  control   shall   thereafter  vest   in   and   be   exercised 
by  the  railroad  commission  as  provided  by  law.     Immediately  upon 
the  entry  of  the  order  declaring  the  result  of  the  election  as  to 
such  proposition,  the  clerk  of  the  legislative  body  or  the  registrar 
of  voters  in  any  municipal  corporation  having  a  board  of  election 
conmiissioners    and    a    registrar    of   voters,    shall    make    copies,    in 
duplicate,  of  such  order,  and  shall  attach  to  each  such  copy  his 
certificate  under  the  seal,  if  any,  of  such  municipal  corporation,  or 
of  such  board  of  election  commissioners,  certifying  that  the  same 
it  a  true  and  correct  copy  of  such  order.     Said  clerk  or  registrar 
of  voters,   as  the  case  may  be,   shall   forthwith  file  one   of  said 
copies   in  the  office  of   the   railroad   commission   of   the  State   of 
California   and   the  other  in   the  office   of  the   secretary   of   state. 
Immediately  upon  the   filing  of  such  certified  copy  of  such  order 
in   the   office   of   the   railroad   commission,    the   powers   of   control 
theretofore   vested   in   such   municipal   corporation   over   any   class 
or   classes   of  public   utilities   which   a   majority  of   the   qualified 
electors   of   such   municipal   corporation  voting   thereof   shall   have 
voted  not  to  retain,  as  shown  by  such  order  shall  thereupon  vest 
in  and  be  exercised  by  the  railroad  commission,  until  such  municipal 


One  copjf  of 
elecUon  returns 
must  be  filed  l»ilh 
Commission  if 
municipality^ 
delegates  contoL 


170 


LOUIS  SLOSS  &  CO. 


Procedure  ip/ien 

municipality  has 

elected  to 

control  public 

utilities. 


Form  of  ballot 
election  to 
surrender. 


Canvassing 

results  of 

election 

to  surrender. 


corporation   shall   reinvest   itself   with   such   powers   of   control    at 
hereinafter  provided. 

Sec.  8.  Any  municipal  corporation  which  shall  have  voted  to 
retain  the  powers  of  control  vested  therein  respecting  any  class  or 
classes  of  public  utilities,  or  which  may  have  reinvested  itself  with 
such  power,  as  hereinafter  provided,  may  thereafter  surrender  ite 
powers  of  control  as  to  such  class  or  classes  of  public  utilities  at  a 
general  municipal  election  or  a  special  election  therein,  called 
for  that  purpose.  The  ballots  to  be  used  at  such  election  shall 
have  printed  thereon,  in  addition  to  the  other  matters  required  by 
law.  separate  propositions  as  to  each  of  the  classes  of  public  utilities 
as  to  which  such  municipal  corporation  may  theretofore  have  voted 
to  retain  its  powers  of  control  or  with  which  it  may  have  reinvested 
itself.  As  to  each  of  such  classes  of  public  utilities,  and  in  addition 
to  the  other  matters  required  by  law  to  be  printed  thereon,  a 
proposition   shall    be   printed    on    the   ballot    to   be   used    at   such 

election  in  substantially  the  following  form:    "Shall 

(name  of  municipal   corporation)    surrender  its  powers   of   control 

over    (here   insert   class    of   public   utility)    to   the 

railroad  commission?**  Opposite  each  such  proposition  to  be  voted 
upon,  and  to  the  right  thereof,  the  words  "Yes**  and  "No**  shall 
be  printed  on  separate  lines,  with  voting  squares.  Any  elector 
desiring  to  vote  to  surrender  the  powers  of  control  of  such  municipal 
corporation  over  any  class  of  public  utility  specified  on  the  ballot, 
shall  stamp  a  cross  (X)  in  the  voting  square  opposite  the  printed 
word  **Yes.**  after  the  proposition  as  to  such  class;  and  any 
elector  desiring  to  vote  not  to  surrender  the  powers  of  control  of 
such  municipal  corporation  over  such  class  of  public  utility,  shall 
stamp  a  cross  (X)  in  the  voting  square  opposite  the  printed  word 
•*No**  after  the  proposition  as  to  such  class.  The  provisions  of 
sections  4.  5  and  7  of  this  act.  in  so  far  as  applicable,  shall  govern 
elections  called,  conducted  and  held  under  the  provisions  of  this 
section  and  to  general  municipal  elections  at  which  such  propositions 
shall  be  submitted.  If  it  shall  appear  from  the  result  of  such 
election  declared  as  provided  in  section  7  of  this  act.  that  a  majority 
of  the  qualified  electors  of  such  municipal  corporation  voting  on 
any  proposition  submitted  as  provided  in  this  section,   shall  have 


PUBUC  UTILITIES  ELECTION  ACT. 


171 


voted  to  surrender  the  powers  of  control  of  such  municipal  corpora- 
tion respecting  any  particular  class  of  public  utility,  such  municipal 
corporation   shall   be   deemed   to   have   surrendered   its   powers   of 
control  as  to  such  class  of  public  utility  to  the  railroad  commission, 
and  such  powers  shall  thereafter  vest  in  and  be  exercised  by  the 
railroad  commission,  as  provided  by  law.  upon  the  filing,  in  the 
office  of  the  railroad  commission,  of  a  certified  copy  of  the  order 
declaring  the  result  of  such  election  until  such  municipal  corporation 
shall  reinvest  iteelf  with  such  powers  as  hereinafter  provided;  and 
if  it  shall  appear  from  the  result  of  such  election,  as  declared,  that 
a  majority  of  such  qualified  electors  voting  on  any  such  proposition 
shall  have  voted  not  to  surrender  such  powers  of  control  respecting 
any  particular  class  of  public  utility,  such  powers  of  control  shall 
continue  in  such  municipal  corporation;  provided,  hoipever,  that  such 
powers  of  control  may  thereafter  be  surrendered  by  such  municipal 
corporation  at  any  subsequent  election  at  which  the  question  of  such 
surrender  may  again  be  submitted  under  the  provisions  of  this  act 
Sec.  9.     Any  mimicipal  corporation  that  shall  have  surrendered 
to  the  railroad  conunission  powers  of  control  respecting  any  class 
of  public  utility  may   thereafter  reinvest   itself  with  such   powers 
by   a  vote   of   the   qualified   electors   thereof   taken   at   a    general 
municipal   election   or   at   a   special   election.      The   ballots   to   be 
used  at  such  election  shall  have  printed  thereon,  in  addition  to  the 
other  matters   required  by   law,   separate   propositions   as   to   each 
class  of  public  utility  designated  in  the  petition  for  such  election  or 
in  the  ordinance  of  intention.    As  to  each  such  class  of  public  utility, 
a   proposition   shall   be  printed   on   the   ballot   m   substantially   the 

following   form:     "Shall    (name   of  municipal 

corporation)  reinvest  itself  with  powers  of  control  over 

(class  of  public  utility)?**  Opposite  each  such  proposition  to  be 
voted  upon  and  to  the  right  thereof,  the  words  ''Yes**  and  "No" 
shall  be  printed  on  separate  lines,  with  voting  squares.  Any  elector 
desiring  to  vote  to  reinvest  such  municipal  corporation  with  powers 
of  control  respecting  any  class  of  public  utility  designated  on  the 
ballot  shall  stamp  a  cross  (X)  in  the  voting  square  after  the  printed 
word  **Yes**  opposite  the  proposition  as  to  such  class,  and  any 
elector  desiring  to  vote  not  to  reinvest  such  municipal  corporation 
with  powers  respecting  such  class  of  public  utility  shall  stamp  a 


'« 9 

t 


Question  of 
control  of  utilities 
ma})  be  submitted 
to  voters  at  any 
election. 

A  municipality 
may  reinvest  itself 
jvith  control  of 
utilities. 


h 


Form  of  ballot 
to  reinvest. 


172 


LOUIS  SLOSS  h  CO. 


cross    (X)    in   Ac  voting  square   after   the  printed   word   "No" 
opposite  such  proposition.     The  provisions  of  sections  4,  5  and  7 
of  this  act,  in  so  far  as  applicable,  shall  apply  to  elections  called, 
conducted   and  held  under  the  provisions  of   this  section  and   to 
general    municipal    elections    at   which    such   propositions    shall    be 
Camass'mg  of  submitted.      If   it   shall   appear   from   the   result   of   such   election, 
election  declared   as  provided  in  said  section    7,   that   a  majority  of   the 
to  reimesi.  qualified    electors    of    such   municipal    corporation    voting    on    any 
proposition  submitted  as  provided  in  this  section  shall  have  voted 
to    reinvest    such    municipal    corporation    with    powers    of    control 
respecting   any   particular   class   of   public   utility,    such   municipal 
corporation   shall  be   deemed   to  have   reinvested   itself   with   such 
powers,  and  upon  the  filing  in  the  office  of  the  railroad  commission 
of  a  certified  copy  of  the  order  declaring  the  result  of  such  election, 
the  powers  of  control  with  which  such  municipal  corporation  shall 
have  voted  to  reinvest  itself,  as  shown  by  such  order,  shall  cease 
to  be  exercised  by  the  railroad  commission,  and  shall  vest  in  and 
be  exercised  by  such  municipal  corporation;    and  if  it  shall  appear 
from  the  result  of  such  election,  as  declared,  that  a  majority  of 
the  qualified  electors  of  such  municipal  corporation  voting  on  any 
such  proposition,  as  provided  in  this  section,  shall  have  voted  not 
to    reinvest    such    municipal    corporation    with    powers    of    control 
respecting    any    particular    class    of    public    utility,    such    powers 
of  control  shall  continue  m  and  be  exercised  by  the  railroad  com- 
mission;   provided,  that  such  municipal  corporation  may  thereafter 
reinvest  itself  with  such  powers  of  control  at  any  subsequent  election 
at   which    such   question   may   be    again   so   submitted    under   the 
provisions  of  this  act. 

Elections  under  Sec.  1 0.  The  holding  of  a  special  election  or  elections,  or 
Act,  ^e  submission  of  propositions  at  any  general  municipal  election, 
under  any  of  the  provisions  of  this  act,  shall  not  be  construed  to 
preclude  the  holding  of  a  subsequent  special  election  or  elections  or 
the  subsequent  submission  of  propositions  at  a  general  municipal 
election  or  elections,  on  the  question  of  the  retention,  surrender  or 
reinvestment  by  a  municipal  corporation  of  its  powers  of  control 
respecting  any  class  or  classes  of  public  utilities,  as  in  this  act 
LimtaAom.  provided;  provided,  that  not  more  than  one  such  special  election 
shall  be  held  within  any  period  of  twelve  months. 


PUBUC  UnUTIES  ELECTION  ACT. 


173 


\ 


Sec  1 1 .     Except  as  otherwise  in  this  act  provided,  the  holding  Lart>s  governing 
and  conducting  of  elections  under  the  provisions  of  this  act,  the  form  special  municipal 
of  the  ballots  used,  the  opening  and  closing  of  the  polls,  the  canvass  ^^^'j^^^^ 
of  the  returns  and  the  declaring  of  the  result  shall  conform,   as 
nearly   as  may  be,   to  such  laws   as  shall   now  or  hereafter   be 
applicable    to   special    municipal    elections    held    in    the    municipal 
corporation  afiected. 


—  "Vi 


Public  Utilities  Act. 


11 
1.) 


( 


Chapter  Fourteen. 

An  Act  to  Provide  for  the  Organization  of  the  Raii^ 
ROAD  Commission,  to  Define  Its  Powers  and  Duties 
AND  THE  Rights.  Remedies.  Powers  and  Duties  of 
Public  Utilities.  Their  Officers.  Define  Its  Powers 
AND  Duties  and  the  Rights.  Remedies,  of  Patrons 
OF  Public  Utilities,  and  to  Provide  Penalties  for 
Offenses  by  Public  Utilities.  Their  Officers, 
Agents  and  Employees  and  by  Other  Persons  and 
Corporations.  Creating  the  "Railroad  Commission 
Fund"  and  Appropriating  the  Moneys  Therein  to 
Carry  Out  the  Provisions  of  This  Act,  and  Repeal- 
ing THE  Railroad  Commission  Act.  Approved  Feb- 
ruary 10.  191 1.  AND  ALSO  Repealing  an  Act  Entitled 
"An  Act  to  Amend  the  Railroad  Commission  Act  by 
Amending  Section  Fifteen  Thereof  Relating  to 
Powers  and  Duties  of  the  Railroad  Commission  of 
THE  State  of  California,  and  to  Amend  Section 
Thirty-seven  Thereof  Relating  to  Free  and 
Reduced-Rate  Transportation  for  Freight  and 
Passengers."  Approved  April  6.  1911,  and  All  Acts 
AND  Parts  of  Acts  Inconsistent  with  the  Provisions 
of  This  Act. 

[Approved  December  23,   1911.] 

The  people  of  the  State  of  California  do  enact  as  follows: 

ARTICLE  I. 
RAILROAD  COMMISSION:    GENERAL  PROVISIONS. 

Short   Title. 

Section  1.     This  act  shall  be  known  as  the  "Public  Utilities  Name  of  act. 
Act**   and  shall   apply   to   the  public  utilities   and   public   services 
herein  described  and  to  the  commission  herein  referred  to. 


.•  v;-jr-.  •_- 


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177 


t 


^i' 


Definition  of 
Commission. 

Commissioner. 


Corporation. 


Definitions. 

Sec.  2.     (a)     The  term  "commission."  when  used  in  this  act, 
means  the  Railroad  Commission  of  the  Sute  of  California. 

(b)  The  term  "commissioner."  when  used  in  this  act,  means 
one  of  the  members  of  the  conmiission. 

(c)  The  term  "corporation."  when  used  in  this  act.  includes 
a  corporation,  a  company,  an  association  and  a  joint-stock  association. 

Person.       (^)      Th«  ^rm  "person."  when  used  in  this  act,  includes  an 
individual,  a  firm  and  a  copartnership. 

(c)  The  term  "transportation  of  persons."  when  used  in  this 
act,  includes  every  service  in  connection  with  or  incidental  to  the 
safely,  comfort  or  convenience  of  the  person  transported  and  the 
receipt,  carriage  and  delivery  of  such  person  and  his  baggage. 

(/)  The  term  "transportation  of  property."  when  used  in  this 
act,  includes  every  service  in  connection  with  or  mcidenUl  to  the 
transportation  of  property,  including  in  particular  its  receipt,  delivery, 
elevation,  transfer,  switching,  carriage,  ventilation,  refrigeration,  icing, 
dunnage,  storage  and  handling,  and  the  transmission  of  credit  by 
express  corporations. 

(g)  The  term  "street  railroad."  when  used  m  this  act.  includes 
every  railway,  and  each  and  every  branch  or  extension  thereof,  by 
whatsoever  power  operated,  being  mainly  upon,  along,  above  or 
below  any  street,  avenue,  road,  highway,  bridge  or  public  place 
within  any  city  and  county,  or  city  or  town,  together  widi  all  real 
estate,  fixtures  and  personal  property  of  every  kind  used  in  con- 
nection therewith,  owned,  controlled,  operated  or  managed  for 
public  use  in  the  transportation  of  persons  or  property;  but  the  term 
"street  railroad."  when  used  in  this  act.  shall  not  include  a  railway 
constituting  or  used  as  a  part  of  a  commercial  or  interurban  railway. 


Transportation 
of  persons. 


Transportation 
of  property). 


Street  railroad. 


Street  railroad 
Corporation. 


;  liflHil 


(h)  The  term  "street  railroad  corporation."  when  used  in  thb 
act,  includes  every  corporation  or  person,  their  lessees,  trustees, 
receivers  or  trustees  appointed  by  any  court  whatsoever,  owning, 
controlling,  operating  or  managing  any  street  railroad  for  compen- 
sation within  this  state. 


(i)  The  term  "railroad."  when  used  in  this  act.  includes  every  Railroad. 
commercial,  interurban  and  other  railway  other  than  a  street 
railroad,  and  each  and  every  branch  or  extension  thereof,  by 
whatsoever  power  operated,  together  with  all  tracks,  bridges, 
trestles,  rights  of  way.  subways,  tunnels,  stations,  depots,  union 
depots,  ferries,  yards,  grounds,  terminals,  terminal  facilities,  struc- 
tures and  equipment,  and  all  other  real  estate,  fixtures  and  personal 
property  of  every  kind  used  in  connection  therewith,  owned,  con- 
trolled, operated  or  managed  for  public  use  in  the  transportation 
of  persons  or  property. 

(/)     TTie  term  "railroad  corporation."  when  used  in  this  act.  Railroad 
includes  every  corporation  or  person,  their  lessees,  trustees,  receivers  corporation. 
or  trustees  appointed  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  railroad  for  compensation  within   this 

(t)     The  term  "express  corporation,"  when  used  in  this  act.  Express 
includes  every  corporation  or  person,  their  lessees,  trustees,  receivers  corporation. 
or    trustees    appointed    by   any   court   whatsoever,    engaged    in    or 
transacting   the   business   of   transporting   any    freight,    merchandise 
or  other  property   for  compensation  on   the  line  of  any  common 
carrier  or  stage  or  auto  stage  line  within  this  state. 

(/)  The  term  "common  carrier."  when  used  in  this  act,  includes  Common  cairier 
every  railroad  corporation;  street  railroad  corporation;  express 
corporation;  dispatch,  sleeping  car,  dining  car,  drawing  room  car, 
freight,  freight-line,  refrigerator,  oil,  stock,  fruit,  car  loaning,  car 
renting,  car  loading  and  every  other  car  corporation  or  person,  their 
lessees,  trustees,  receivers  or  trustees  appointed  by  any  court  what- 
soever, operating  for  compensation  within  this  state;  and  every 
corporation  or  person,  their  lessees,  trustees,  receivers  or  trustees 
appointed  by  any  court  whatsoever,  ownmg.  controlling,  operating 
or  managing  any  vessel  regularly  engaged  in  the  transportation  of 
persons  or  property  for  compensation  upon  the  waters  of  this  state 
or  upon  the  high  seas,  over  regular  routes  between  points  within 
this  state. 

(m)     The  term  "pq)e  line."  when  used  m  this  act.  includes  all   dv    /• 
\       .  r  II  *  'P<^  tine. 

real    estate,    hxtures    and    personal    property,    owned,    controlled. 


Ill 


lil 


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PUBUC  UTILITIES  ACT 


h 


operated  or  managed  in  connection  with  or  to  facilitate  the  trans- 
mission, storage,  distribution  or  delivery  of  crude  oil  or  other  fluid 
substances  except  water  through  pipe  lines. 

Pipe  line       (n)     The  term  **pipe  line  corporation/*  when  used  in  this  act, 

corporation,  includes  every  corporation  or  person,  their  lessees,  trustees,  receivers 

or  trustees  appointed  by  any  court  whatsoever,  owning,  controlling, 

operating  or  managing  any  pipe  line  for  compensation  within  this 

state. 

Cas  plant  (o)  The  term  **gas  plant,**  when  used  in  this  act,  includes  all 
real  estate,  fixtures  and  personal  property,  owned,  controlled,  oper- 
ated or  managed  in  connection  with  or  to  facilitate  the  production, 
generation,  transmission,  delivery  or  furnishing  of  gas  (natural  or 
manufactured)  for  light,  heat  or  power. 

Cas  corporation.       (p)     The    term    **gas    corporation,**    when    used    in    this    act, 

induc^es  every  corporation  or  person,  their  lessees,  trustees,  receivers 
or  trustees  appointed  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  gas  plant  for  compensation  within  this 
state,  except  where  gas  is  made  or  produced  on  and  distributed 
by  the  maker  or  producer  through  private  property  alone  solely  for 
his  own  use  or  the  use  of  his  tenants  and  not  for  sale  to  others. 

Electric  plant.  (q)  The  term  "electric  plant,**  when  used  in  this  act,  mcludes 
all  real  estate,  fixtures  and  personal  property  owned,  controlled, 
operated  or  managed  in  connection  with  or  to  facilitate  the  pro- 
duction, generation,  transmission,  delivery  or  furnishing  of  electricity 
for  lic^t,  heat  or  power,  and  all  conduits,  ducts  or  other  devices, 
materials,  apparatus  or  property  for  containing,  holding  or  carrying 
conductors  used  or  to  be  used  for  the  transmission  of  electricity 
for  light,  heat  or  power. 

Electrical  (f)  The  term  "electrical  corporation,*'  when  used  in  this  act, 
corporation,  jjjdudes  every  corporation  or  person,  their  lessees,  trustees,  receivers 
or  trustees  appointed  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  electric  plant  for  compensation  within 
this  state,  except  where  electricity  is  generated  on  or  distributed  by 
the  producer  through  private  property  alone  solely  for  his  own  use 
or  the  use  of  his  tenants  and  not  for  sale  to  others. 


179 


(s)  The  term  "telephone  line,**  when  used  in  this  act,  includes  Telephone  line. 
all  conduits,  ducts,  poles,  wires,  cables,  instruments  and  appliances, 
and  all  other  real  estate,  fixtures  and  personal  property  owned, 
controlled,  operated  or  managed  in  connection  with  or  to  facilitate 
communication  by  telephone,  whether  such  conununication  is  had 
with  or  without  the  use  of  transmission  wires. 

(0      The  term  "telephone  corporation,**  when  used  in  this  act.    Telephone 
includes  every  corporation  or  person,  their  lessees,  trustees,  receivers    corporation. 
or  trustees  appointed  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  telephone  line  for  compensation  within 
this  state. 

(u)  The  term  **telegraph  line,**  when  used  in  this  act,  includes  Telegraph  line. 
all  conduits,  ducts,  poles,  wires,  cables,  instruments  and  appliances, 
and  all  other  real  estate,  fixtures  and  personal  property  owned, 
controlled,  operated  or  managed  in  connection  with  or  to  facilitate 
communication  by  telegraph,  whether  such  communication  is  had 
with  or  without  the  use  of  transmission  wires. 

(v)      The  term  ''telegraph  corporation,**  when  used  in  this  act.    Telegraph 
includes  every  corporation  or  person,  their  lessees,  trustees,  receivers    corporation. 
or  trustees  appointed  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  telegraph  line  for  compensation  within 
this  state. 

(»)  The  term  "water  system,**  when  used  in  this  act,  includes  Water  system. 
all  reservoirs,  tunnels,  shafts,  dams,  dikes,  head-gates,  pipes,  flumes, 
canals,  structures  and  appliances,  and  all  other  real  estate,  fixtures 
and  personal  property,  owned,  controlled,  operated  or  managed  in 
connection  with  or  to  facilitate  the  diversion,  development,  storage, 
•upply,  distribution,  sale,  furnishing,  carriage,  apportionment  or 
measurement  of  water  for  power,  irrigation,  reclamation  or  manu- 
facturing, or  for  municipal,  domestic  or  other  beneficial  use. 

(x)      The   term   "water   corporation,**   when   used   in   this   act.    Water 
includes  every  corporation  or  person,  their  lessees,  trustees,  receivers   corporation. 
or  trustees  appomted  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  water  system  for  compensation  within 
this  state. 


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LOUIS  SLOSS  &  CO. 


{.' 


if' 


Vessel  (p)  The  term  "vessel."  when  used  in  this  act,  includes  every 
species  of  water  craft,  by  whatsoever  power  operated,  which  it 
owned,  controlled,  operated  or  managed  for  public  use  in  the 
transportation  of  persons  or  property. 

Wharfinger.  («)  The  term  "wharfinger,"  when  used  in  this  act.  includes 
every  corporation  or  person,  their  lessees,  trustees,  receivers  or 
trustees,  appointed  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  dock,  wharf  or  structure  used  by  vessels 
in  connection  with  or  to  facilitate  the  receipt  or  discharge  of  freight 
or  passengers   for  compensation  within  this  state. 

Warehouseman  (aa)  The  term  "warehouseman,"  when  used  in  this  act, 
includes  every  corporation  or  person,  their  lessees,  trustees,  receivers 
or  trustees  appointed  by  any  court  whatsoever,  owning,  controlling, 
operating  or  managing  any  building  or  structure  in  which  property 
is  regularly  stored  for  compensation  widiin  this  state,  in  connection 
with  or  to  facilitate  the  transportation  of  property  by  a  common 
carrier  or  vessel,  or  the  loading  or  unloading  of  the  same,  other 
than  a  dock,  wharf  or  structure,  owned,  operated,  controlled  or 
managed  by  a  wharfinger. 

Public  Ulil'ii^.  (^^)  The  term  "public  utility,"  when  used  in  this  act,  mdudes 
every  common  carrier,  pipe  line  corporation,  gas  corporation,  elec-» 
trical  corporation,  telephone  corporation,  telegraph  corporation,  water 
corporation,  wharfinger  and  warehouseman,  as  those  terms  are 
defined  in  this  section,  and  each  thereof  is  hereby  declared  to  be  a 
public  utility  and  to  be  subject  to  the  jurisdiction,  control  and  regu- 
lation of  the  commission  and  to  the  provisions  of  this  act 

Railroad  Commission:  Appointment:  Term:  Vacancies: 

Removal. 

Railroad      Sec,   3.      (a)      The  railroad  commission  shall   consist  of  five 

Commission:  members,  who  shall  be  appointed  by  the  governor  from  the  state 

Appointment  f^i  large;    provided,  that  the  three  conunissioners  in  office  on  the 

^^^"^'  tenth  day  of  October,  nineteen  hundred  and  eleven,  shall  serve  out 

the  term   for  which   they  were  elected,   and   that  two   additional 

commissioners  shall  be  appointed  by  the  governor  to  hold  office 

during  the  same  term.     Upon  the  expiration  of  said  term,  the  term 


PUBUC  UTILITIES  ACT 


181 


of  office  of  each  commissioner  thereafter  shall  be  six  years,  excepting 
that  of  the  conmiissioners  first  appointed  after  the  expiration  of  said 
term  one  shall  be  appointed  to  hold  office  until  the  first  day  of 
January,  nineteen  hundred  and  seventeen,  two  until  the  first  day  of 
January,  nineteen  hundred  and  nineteen,  and  two  until  the  first  day 
of  January,  nineteen  hundred  and  twenty-one.  The  commissioners 
shall  elect  one  of  their  number  president  of  the  commission. 

(b)     Whenever  a  vacancy  in  the  office  of  commissioner  shall  Vacancies. 
occur,  the  governor  shall  forthwith  appoint  a  qualified  person  to  fill  removal. 
the  same  for  the  unexpired  term.     The  legislature,  by  a  two-thirds 
vote  of  all  members  elected  to  each  house,  may  remove  any  one 
or  more  of  said  commissioners  from  office  for  dereliction  of  duty  or 
corruption  or  incompetency. 

Attorney. 

Sec.  4.  The  commission  shall  have  power  to  appoint  as  attorney  Attorne\f, 
to  the  commission  an  attorney  at  law  of  this  state,  who  shall  hold 
office  during  the  pleasure  of  the  commission.  It  shall  be  the  right 
and  the  duty  of  the  attorney  to  represent  and  appear  for  the 
people  of  the  State  of  California  and  the  commission  in  all  actions 
and  proceedings  involving  any  question  under  this  act  or  under 
any  order  or  act  of  the  commission,  and,  if  directed  to  do  so  by 
the  conunission,  to  intervene,  if  possible,  in  any  action  or  proceeding 
in  which  any  such  question  is  involved;  to  commence,  prosecute  and 
expedite  the  final  determination  of  all  actions  and  proceedings 
directed  or  authorized  by  the  commission;  to  advise  the  commission 
and  each  conunissioner,  when  so  requested,  in  regard  to  all  matters 
in  connection  with  the  powers  and  duties  of  the  commission  and  the 
members  thereof;  and  generally  to  perform  all  duties  and  services 
as  attorney  to  the  commission  which  the  commission  may  require 
of  him. 

Secretary:    Assistant  Secretary. 

Sec.  5.     The  commission  shall  appwnt  a  secretary,  who  shall  Secretary^. 
hold  office  during  its  pleasure.     It  shall  be  the  duty  of  the  secretary 
to  keep  a  full  and  true  record  of  all  proceedings  of  the  commis- 
sion, to  issue  all  necessary  process,  writs,  warrante  and  notices,  and 


•  f 


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PUBLIC  UTILITIES  ACT 


163 


Assistant  to  perform  such  other  duties  as  the  commission  may  prescribe.     The 

Secretary,  commission  may  appoint  an  assistant  secretary,  who  shall  have  all 

the  powers  conferred  by  law  upon  peace  officers  to  carry  weapons. 

make  arrests  and  serve  warrants  and  other  process  in  any  county 

or  city  and  county  of  this  state. 

Additional  Officers  and  Employees. 

Other  employees       Sec.  6.     The  commission  shall  have  power  to  employ,  during 

to  be  appointed  jj,  pleasure,   such  officers,   experts,  engineers,   statisticians,   account- 

^  "'  ants,  inspectors,  clerks  and  employees  as  it  may  deem  necessary  to 

carry  out  the  provisions  of  this  act  or  to  perform  the  duties  and 
exercise  the  powers  conferred  by  law  upon  the  conunission. 

Oath  of  Office:   Eligibility  of  Commissioners  and 

Employees. 

Sec.   7.     Each  commissioner  and  each  person  appointed  to  a 

civil  executive  office  by  the  commission  shall,  before  entering  upon 

the  duties  of  his  office,  take  and  subscribe  the  constitutional  oath  of 

office.     Each  commissioner  shall  be  a  qualified  elector  of  this  state, 

and  no  person  in  the  employ  of  or  holding  any  official   relation 

to  any  corporation  or  person,  which  said  corporation  or  person  is 

subject  in  whole  or  in  part  to  regulation  by  the  commission,  and 

no  person  owning  stocks  or  bonds  of  any  such  corporation  or  who 

Commissioners  is  in  any  manner  pecuniarily  interested   therein  shall  be  appointed 

or  employees  ^  ^  jj^^jj  ^^  office  of  commissioner  or  be  appointed  or  employed 

mus  no  0       i      ^^  commission;    provided,  that  if  any  such  person  shall  become 

stocks  or  bonds    ;  r       i  i  i      i         i  •     i     •  i 

except    .  .  .    ^^  owner  or  such  stocks  or  t>onds  or  become  pecuniarily  mterested 

in  such  corporation  otherwise   than  voluntarily,   he   shall   within   a 

;  reasonable  time  divest  himself  of  such  ownershq>  or  interest;    failing 

to  do  so,  his  office  or  employment  shall  become  vacant. 

Office  of  Commission:   Meetings:  Official  Seal: 
Supplies  and  Equipment. 

Office  of  Sec.  8.  (a)  The  office  of  the  commission  shall  be  in  tfie 
Commission  in  city  and  county  of  San  Francisco.  The  office  shall  always  be 
San  Francisco,  ©pen,   legal   holidays  and   non-judicial   days  excepted.      The  com- 


mission shall  hold  its  sessions  at  least  once  in  each  calendar  month  Sessions 
in  said  city  and  county  of  San  Francisco,  and  may  also  meet  at  monthly. 
such  other  times  and  in  such  other  places  as  may  be  expedient  and 
necessary  for  the  proper  performance  of  its  duties.     For  the  purpose  Meetings 
of  holding  sessions  in   places  other   than   the   city   and  county   of  ^'*^^^^''^- 
San  Francisco,   the  commission  shall  have  power  to  rent  quarters 
or  offices,  and  the  expense  thereof  and  in  connection  therewith  shall 
be  paid  in  the  same  manner  as  other  expenses  authorized  by  this '^^^*'^"?  ^^^ 
act     The  sessions  of  the  conunission  shall  be  public. 


to  public. 


(b)  The  commission  shall  have  a  seal,  bearing  the  following 
inscription:     "Railroad    Commission    State    of    California."      The 

seal  shall  be  affixed  to  all  writs  and  authentications  of  copies  of  Courts  must 
records  and  to  such  other  instruments  as  the  commission  shall  direct  ^<^h  judicial 
All  courts  shall  uke  judicial  notice  of  said  seal.  "^'^^^  ^f  ^e^'- 

(c)  The   commission    is    authorized    to   procure    all    necessary  £^u;p;y,en/. 
boob.     maps,     charts,     stationery,     instruments,     office     furniture, 
apparatus  and  appliances,  and  the  same  shall  be  paid  for  in  the 

same  manner  as  other  expenses  authorized  by  this  act 

Quorum. 

Sec.   9.      A   majority   of   the  commissioners  shall    constitute   ti  Majority 
quorum   for  the  transaction  of   any  business,   for   the  performance  Commissroneff 
of  any  duty  or  for  the  exercise  of  any  power  of  the  commission.  ^  ^"o''"'"- 
No  vacancy  in  the  commission  shall  impair  the  right  of  the  remain- 
ing  commissioners   to   exercise   all   the   powers   of   the   commission. 
The  act  of  a  majority  of  the  commissioners  when  in  session  as  a 
board  shall  be  deemed  to  be  the  act  of  the  commission:    but  any 
investigation,   inquiry  or  hearing  which   the  commission  has  power  p 
to  undertake  or  to  hold  may  be  undertaken  or  held  by  or  htiore  singh^ 
any  commissioner  designated   for  the  purpose  by   the  commission,  comm/ssroner. 
and  every  finding,  order  or  decision  made  by  a  commissioner  so 
designated,  pursuant  to  such  investigation,  inquiry  or  hearing,  when 
approved  and  confirmed  by  the  commission  and  ordered  filed  in  its 
office,  shall  be  and  be  deemed  to  be  the  finding,  order  or  decision 
of  the  commission. 


M 


M 


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PUBUC  UTILITIES  ACT 


Salaries  and  Expenses. 

Salary  of       Sec.   10.      (a)     The  annual  salary  of  each  commissioner  shall 
Commissioners,  j^  ^^  thousand   (6.000)   dollars.     All  officers,  experts,  engineers. 

statisticians,    accountants,    mspectors,   clerks   and   employees   of   the 
Compensation  commission   shall   receive   such   compensation   as   may   be   fixed   by 
of  employees.   ^^  commission.     The  commissioners,  attorney,  secretary,  rate  expert 
and   assistant  secretary   shall   be   civil   executive   officers   and   their 
salaries  as  fixed  by  law  or  the  commission  shall  be  paid  in  the 
Honj  paid,  same  manner  as  are  the  salaries  of  other  state  officers.     The  salary 
or  compensation  of  every  other  person  holding  office  or  employment 
under  the  conmiission  shall  be  paid  monthly  from  the  funds  appro- 
priated for  the  use  of  the  conunission.  after  being  approved  by  the 
commission.   iq>on  claims  therefor  to  be  audited  by  the  board  of 
control. 

Expenses.  (fc)  ^  expenses  incurred  by  the  commission  pursuant  to  die 
provisions  of  this  act,  including  the  actual  and  necessary  traveling 
and  other  expenses  and  disbursements  of  the  commissioners,  their 
officers  and  employees,  incurred  while  on  business  of  the  commission, 
Hon?  paid.  ^^Jl  [^  p^^jj  ff^Qj  ^^e  funds  appropriated  for  the  use  of  the 
commission,  after  being  approved  by  the  commission,  upon  claims 
therefor  to  be  audited  by  the  board  of  control. 

Transportation  for  Commissioners.  Officers  and 

Employees. 

^r^^       Sec.    11.     Tlie  commissioners  and  the  officers  and  employees 
i  rC  of  the  commission,  shall,  when  in  the  performance  of  their  official 

duties,  have  the  right  to  pass,  free  of  charge,  on  all  railroads,  cars, 
vessels  and  other  vehicles  of  every  common  carrier,  as  said  term  it 
defined  in  diis  act,  subject  in  whole  or  in  part  to  control  or  regu- 
lation by  the  commission,  between  points  within  this  state,  and  such 
persons  shall  not  be  denied  the  right  to  travel  upon  any  railroad, 
car,  vessel  or  other  vehicle  of  such  common  carrier,  whether  such 
raOroad.  car.  vessel  or  other  vehicle  be  used  for  the  transportation 
of  passengers  or  freight,  and  regardless  of  its  class. 


185 


Annual   Report. 

Sec.    12.      The   commission   shall    make   and     submit     to   the  Complete 
governor  on  or  before  the   first  day   of   December   of   each   year  feporls  to  be 
subsequent  to  the  year  nineteen  hundred  and  twelve,  a  report  con-  "^       annually. 
taining    a    full    and    complete    account    of    its    transactions    and 
proceedings  for  the  preceding  fiscal  year,  together  with  such  other 
facts,  suggestions,  and  reconunendations  as  it  may  deem  of  value  to 
the  people  of  the  state. 

ARTICLE  II. 
DUTIES   OF   PUBLIC   UTILITIES. 

Charges:    Service  and  Facilities:    Rules  and 

Regulations. 


Sec.  13.  (a)  All  charges  made,  demanded  or  received  by 
any  public  utility,  or  by  any  two  or  more  public  utilities,  for  any 
product  or  commodity  furnished  or  to  be  furnished  or  any  service 
rendered  or  to  be  rendered  shall  be  just  and  reasonable.  Every 
unjust  or  unreasonable  charge  made,  demanded  or  received  for  such 
product  or  conmiodity  or  service  is  hereby  prohibited  and  declared 
unlawful. 


Public  utility 
charges  must 
be  reasonable. 


Unreasonable 

charges 

prohibited. 


(b)  Every  public  utility  shall  furnish,  provide  and  maintain  Service  and 
such  service,  instrumentalities,  equipment  and  facilities  as  shall  pro-  facilities  must 
mote   the  safety,   health,   comfort  and  convenience  of   its  patrons,  ^^  adequate 
employees  and  the  public,  and  as  shall  be  in  all  respects  adequate, 

efficient,  just  and  reasonable. 

(c)  All  rules  and  regulations  made  by  a  public  utility  affecting  Rules  must 
or  pertaining  to  its  charges  or  service  to  the  public  shall  be  just  i^c  reasonable, 
and  reasonable. 

Tariff  Schedules:  Publication. 

Sec.   14.     (a)     Every  common  carrier  shall  file  with  the  com-  Common 
mission   and   shall   print   and   keep   open   to   the   public   inspection  carriers  must 
schediiles  showing  the  rates,   fares,  charges  and  classifications  for  pMishrate 
the  transportation  between  termini  within  this  state  of  persons  and  ^^  ^  "  ^* 
property  from  each  point  upon  its  route  to  all  other  points  thereon; 
and  from  each  point  upon  its  route  to  all  points  upon  every  other 


M      ♦ 


(il^ 


f     i 


186 


If         I 


II 


LOUIS  SLOSS  &  CO. 


Information 

ivhich  must 

be  given. 


Schedules 

must  be  kept 

open  to  public. 

Where  kept. 


Form  of 

schedule  to  be 

prescribed  b}f 

Commission. 


route  leased,  operated  or  controlled  by  it;  and  from  each  pomt  on 
its  route  or  upon  any  route  leased,  operated  or  controlled  by  it  to 
all  points  upon  the  route  of  any  other  common  carrier,  whenever  a 
through  route  and  a  joint  rate  shall  have  been  established  or 
ordered  between  any  two  such  points.  If  no  joint  rate  over  a 
through  route  has  been  established,  the  schedules  of  the  several 
carriers  in  such  through  route  shall  show  the  separately  established 
rates,  fares,  charges  and  classifications  applicable  to  the  through 
transportation.  The  schedules  printed  as  aforesaid  shall  plainly 
state  the  places  between  which  property  and  persons  will  be  carried, 
and  shall  also  contain  the  classification  of  passengers  or  property 
in  force,  and  shall  also  state  separately  all  terminal  charges,  storage 
charges,  icing  charges  and  all  other  charges  which  the  commission 
may  require  to  be  stated,  all  privileges  or  facilities  granted  or 
allowed,  and  all  rules  or  regulations  which  may  in  any  wise  change, 
affect  or  determine  any  part,  or  the  aggregate  of,  such  rates,  fares, 
charges  and  classifications,  or  the  value  of  the  service  rendered  to  the 
passenger,  shipper  or  consignee.  Subject  to  such  rules  and  regula- 
tions as  the  commission  may  prescribe,  such  schedules  shall  be  plainly 
printed  in  large  type,  and  a  copy  thereof  shall  be  kept  by  every  such 
carrier  readily  accessible  to  and  for  inspection  by  the  public  in  every 
station  or  office  of  such  carrier  where  passengers  or  property  are 
respectively  received  for  transportation,  when  such  station  or  office 
is  in  charge  of  an  agent,  and  in  every  station  or  office  of  such  carrier 
where  passenger  tickets  or  tickets  for  sleeping,  parlor  car  or  other 
train  accommodations  are  sold  or  bills  of  lading  or  waybills  or 
receipts  for  property  are  issued.  Any  or  all  of  such  schedules  kept 
as  aforesaid  shall  be  immediately  produced  by  such  carrier  for  inspec- 
tion upon  the  demand  of  any  person.  A  notice  printed  in  bold  type 
and  stating  that  such  schedules  are  on  file  with  the  agent  and  open 
to  inspection  by  any  person,  and  that  the  agent  will  assist  any  person 
to  determine  from  such  schedules  any  rates,  fares,  rules  or  regulations 
in  force,  shall  be  kept  posted  by  the  carrier  in  two  public  and 
conspicuous  places  in  every  such  station  or  office.  The  form  of 
every  such  schedule  shall  be  prescribed  by  the  commission  and  shall 
conform  in  the  case  of  common  carriers  subject  to  the  act  of  congress 
entided  **An  act  to  regulate  commerce,**  approved  February  fourth, 
eighteen  hundred  and  eighty-seven,  and  the  acts  amendatory  thereof 


PUBUC  UTIUTIES  ACT 


187 


and  supplementary  thereto,  as  nearly  as  may  be  to  the  form  of 
schedules  prescribed  by  the  interstate  commerce  commission  under 
said  act. 


(b)  Under  such  rules  and  regulations  as  the  commission  may 
prescribe,  every  public  utility  other  than  a  common  carrier  shall  file 
with  the  commission  within  such  time  and  in  such  form  as  the 
commission  may  designate,  and  shall  print  and  keep  open  to  public 
inspection  schedules  showing  all  rates,  tolls,  rentals,  charges  and 
classifications  collected  or  enforced,  or  to  be  collected  or  enforced, 
together  with  all  rules,  regulations,  contracts,  privileges  and  facilities 
which  in  any  manner  affect  or  relate  to  rates,  tolls,  rentals,  classifica- 
tions, or  service.  The  rates,  tolls,  rentals  and  charges  shown  on  such 
schedules  when  filed  by  a  public  utility  as  to  which  the  commission 
by  this  act  acquires  the  power  to  fix  any  rates,  tolls,  rentals  or 
charges,  shall  not,  within  any  portion  of  the  territory  as  to  which  the 
commission  acquires  as  to  such  public  utility  such  power,  exceed  the 
rates,  tolls,  rentals  or  charges  in  effect  on  the  tenth  day  of  October, 
nineteen  hundred  and  eleven;  the  rates,  tolls,  rentals  and  charges 
shown  on  such  schedules,  when  filed  by  any  public  utility  as  to 
any  territory  as  to  which  the  commission  does  not  by  this  act  acquire 
as  to  such  public  utility  such  power,  shall  not  exceed  the  rates,  tolls, 
rentals  and  charges  in  effect  at  the  time  the  commission  acquires  as  to 
such  territory  and  as  to  such  public  utility  the  power  to  fix  rates, 
tolls,  rentals  or  charges.  Nothing  in  this  section  contained  shall 
prevent  the  commission  from  approving  or  fixing  rates,  tolls,  rentals 
or  charges,  from  time  to  time,  m  excess  of  or  less  than  those  shown 
by  said  schedules. 


Other  public 
utilities  must 
publish  rates 
and  charges^ 
rules^ 
regulations^  etc. 


Charges  must  not 
exceed  those  in 
effect  October 
10,  19/ 1, 


Commission  may 
fix  charges. 


(c)     The  commission  shall  have  power,  from  time  to  time,  in  its  Commission  may 

discretion,  to  determine  and  prescribe  by  order  such  changes  in  the  change  form 

form  of  the  schedules  referred  to  in  this  section   as  it  may  find  ^^  scneauie. 
expedient,  and  to  modify  the  requirements  of  any  of  its  orders,  rules 
or  regulations  in  respect  to  any  matter  in  this  section  referred  to. 

Changes  in  Schedules;    Notice  Required.  Public  utility 

Sec.    15.     Unless  the  commission  otherwise  orders,   no  change  ^^^^^^^^^^     ^ 

I    ,,  ,  ,    ,  1 1-        •!•      •  f  11  1  changed  rvithout 

shall  be  made  by  any  public  utility  m  any  rate,  rare,  toll,  rental,  thirty  days* 

charge  or  classification,  or  in  any  rule,  regulation  or  contract  relating  notice. 


'A 


I 


188 


LOUIS  SLOSS  &  CO. 


Except 


n  f 


to  or  affecting  any  rate,  fare,  toll,  rental,  charge,  classification  or 
service,  or  in  any  privilege  or  facility,  except  after  thirty  days* 
notice  to  the  commission  and  to  the  public  as  herein  provided.  Such 
notice  shall  be  given  by  filing  with  the  commission  and  keeping  open 
for  public  inspection  new  schedules  stating  plainly  the  change  or 
changes  to  be  made  in  the  schedule  or  schedules  then  in  force,  and 
the  time  when  the  change  or  changes  will  go  into  etfect  The 
commission,  for  good  cause  shown,  may  allow  changes  without 
requiring  the  thirty  days*  notice  herein  provided  for,  by  an  order 
specifying  the  changes  so  to  be  made  and  the  time  when  they  sHall 
take  effect,  and  the  manner  in  which  they  shall  be  filed  and  pub- 
lished. When  any  change  is  proposed  in  any  rate,  fare,  toll,  rental, 
charge  or  classification,  or  in  any  form  of  contract  or  agreement  or 
in  any  rule,  regulation  or  contract  relating  to  or  affecting  any  rate, 
fare,  toll,  rental,  charge,  classification  or  service,  or  in  any  privilege 
or  facility,  attention  shall  be  directed  to  such  change  on  the  schedule 
filed  with  the  commission,  by  some  character  to  be  designated  by  the 
commission,  immediately  preceding  or  following  the  item. 


Joint  tariffs  and 
concurrences. 


No  common 

carrier  may 

engage  in 

transportation 

until  schedules 

are  filed. 


Concurrence  in  Joint  Tariffs. 

Sec.  16.  The  names  of  the  several  public  utilities  which  are 
parties  to  any  joint  tariff,  rate,  fare,  toll,  contract,  classification  or 
charge  shall  be  specified  in  the  schedule  or  schedules  showing  the 
same.  Unless  otherwise  ordered  by  the  commission,  a  schedule 
showing  such  joint  tariff,  rate,  fare,  toll,  contract,  classification  or 
charge  need  be  filed  with  the  commission  by  only  one  of  the  parties 
to  it;  provided,  that  there  is  also  filed  with  the  commission  in  such 
form  as  the  commission  may  require  a  concurrence  in  such  joint 
tariff,  rate,  fare,  toll,  contract,  classification  or  charge  by  each  of  the 
other  parties  thereto. 

Rates  and  Fares  as  Published  to  Be  Charged: 

ElXCEPTIONS. 

Sec.  17.  (a)  1.  No  common  carrier  subject  to  the  provisions 
of  this  act  shall  engage  or  participate  in  the  transportation  of  persons 
or  property,  between  points  within  this  state,  until  its  schedules  of 
rates,  fares,  charges  and  classifications  shall  have  been  filed  and 
published  m  accordance  with  the  provisions  of  this  act. 


PUBUC  UTILITIES  ACT 


189 


2.  No  common  carrier  shall  charge,  demand,  collect  or  receive  a 
greater  or  less  or  different  compensation  for  the  transportation  of 
persons  or  property,  or  for  any  service  in  connection  therewith,  than 
the  rates,  fares  and  charges  applicable  to  such  transportation  as 
specified  in  its  schedules  filed  and  in  effect  at  the  time:  nor  shall 
any  such  carrier  refund  or  remit  in  any  manner  or  by  any  device  any 
portion  of  the  rates,  fares  or  charges  so  specified,  except  upon  order 
of  the  conmiission  as  hereinafter  provided,  nor  extend  to  any  corpora- 
tion or  person  any  privilege  or  facility  m  the  transportation  of 
passengers  or  property  except  such  as  are  regularly  and  uniformly 
extended  to  all  corporations  and  persons. 

3.  No  common  carrier  subject  to  the  provisions  of  this  act  shalL 
directly  or  indirecdy,  issue,  give  or  tender  any  free  ticket,  free  past 
or  free  or  reduced-rate  transportation  for  passengers  between  points 
within  this  state,  except  to  its  officers,  agents,  employees,  attorneys, 
physicians  and  surgeons,  and  members  of  their  families;  to  ministers 
of  religion,  traveling  secretaries  of  railroad  men*s  religious  associa- 
tions, or  executive  officers,  organizers  or  agents  of  railroad  employees* 
mutual  benefit  associations  giving  the  greater  portion  of  their  time 
to  the  work  of  any  such  association ;  inmates  of  hospitals  or  charitable 
or  eleemos3mary  institutions,  and  persons  exclusively  engaged  in 
charitable  or  eleemosynary  work,  and  persons  and  property  engaged 
or  employed  in  educational  work  or  scientific  research  when  permitted 
by  the  commission;  to  the  executive  officers  of  mercantile  or  promotion 
boards  or  bodies  within  this  state  when  traveling  in  the  performance 
of  duties  affecting  the  advancement  of  the  business  of  such  boards 
or  bodies,  or  the  development  of  trade  or  industry  within  or  without 
this  state,  when  authorized  by  the  commission;  to  hotel  employees  of 
season  resort  hotels,  when  authorized  by  the  commission;  to  indigent, 
destitute  and  homeless  persons  and  to  such  persons  when  transported 
by  charitable  societies  or  hospitals,  and  the  necessary  agents 
employed  in  such  transportation;  to  inmates  of  the  national  homes  or 
state  homes  for  disabled  volunteer  soldiers  and  of  soldiers*  and 
sailors*  homes,  mduding  those  about  to  enter  and  those  returning 
home  after  discharge;  to  necessary  caretakers,  going  and  returning, 
of  live  stock,  poultry,  milk,  fruit  and  other  freight,  under  uniform 
and   non-discriminatory   regulations;    to   employees   of   sleeping   car 


Compensation  for 
transportation 
may  not  differ 
from  published 
rates. 

No  refunds  may 
be  made  except 
by  order  of 
Commission. 

Facilities  and 
privileges  must 
be  uniform. 

Free  and 
reduced  rates 
transportation 
prohibited 
except.  .  . 


f 


190 


LOUIS  SLOSS  &  CO. 


Term 

**  Emplo'^tes' 

defijKd. 


Term 

"Families^* 

defined. 


Shippers 
of  freight. 


Transportation 

m  exchange  for 

advertising. 


Free 

tansportation 

of  express 

matter  for 

personal  use. 


corporations,  express  corporations  and  telegraph  and  telephone  cor- 
porations; to  railway  mail  service  employees.  United  States  internal 
revenue  officers,  post  office  inspectors,  customs  officers  and  inspectors 
and   inmiigration   inspectors  when   traveling   in   the  course  of   their 
official    duty;    to   newsboys   on    trains,    baggage    agents,    witnesses 
attending  any  legal  investigation  in  which  the  carrier  is  interested, 
persons  injured  in  accidents  or  wrecks  and  physicians  and  nurses 
attending  such  persons;   provided,   that  the   term   "employees."   as 
used  in  this  section,  shall  include  furloughed.  pensioned  and  super- 
annuated employees,  persons  who  have  become  disabled  or  infirm 
in  the  service  of  any  such  carrier,  ex-employees  traveling  for  the 
purpose  of  entering  the  service  of  any  such  carrier,  and  the  remains 
of  persons  dying  while  in  the  employment  of  any  such  carrier;  and 
the  term  "families.**  as  used  in  this  section,  shall  mdude  the  families 
of  those  persons  heretofore  named  in  this  proviso,   the  families  of 
persons  killed,  and  the  widows  during  widowhood  and  minor  chil- 
dren during  minority  of  persons  who  died  while  in  the  service  of  any 
such  carrier;  and  provided,  further,  that  no  free  ticket,  free  pass  or 
free  or  reduced-rate  transportation  shall  be  issued,  given  or  tendered 
to  any  officer,  agent  or  employee  of  a  common  carrier,  who  is  at  the 
same  time  a  shipper  or  receiver  of  freight,  or  an  officer,  agent  or 
employee  of  a  shipper  or  receiver  of  freight,  unless  such  officer,  agent 
or  employee  devotes  substantially  his  entire  time  to  the  service  of  such 
carrier;   and  provided,  further,   that  the  members  of  the  railroad 
commission,  their  officers  and  employees,  shall  be  entitled,  when  in 
the  performance  of  their  official  duties,  to  free  transportation  over  the 
lines  of  all  common  carriers  within  this  state;  and  provided,  further, 
that    passenger    transportation    may    issue    to    the    proprietors    and 
employees  of  newspapers  and  magazines  and  the  members  of  their 
immediate  families,  in  exchange  for  advertising  space  in  such  news- 
papers or  magazines  at  full  rates,  subject  however  to  such  reasonable 
restrictions  as  the  commission  may  impose. 

Nothing  in  this  act  contained  shall  be  construed  to  prohibit  the 
issue  by  express  corporations  of  free  or  reduced-rate  transportation 
for  express  matter  to  their  officers,  agents,  employees,  attorneys, 
physicians  and  surgeons,  and  members  of  their  families,  or  the 
interchange  of  free  or  reduced-rate  transportation  for  passengers  or 
express    matter    between    common    carriers,    their    officers,    agents. 


(  ' 


PUBUC  UTILITIES  ACT 


191 


Free  telephone 
and  telegraph 
franks. 


Prior  contracts 
for  transportaUon, 


employees,  attorneys,  physicians  and  surgeons,  and  members  of  their 
families;  provided,  that  such  express  matter  be  for  the  personal  use 
of  the  person  to  or  for  whom  such  free  or  reduced-rate  transportation 
is  granted,  or  of  his  family:  nor  to  prohibit  the  issue  of  passes  or  franks 
by  telegraph  or  telephone  corporations  to  their  officers,  agents, 
employees,  attorneys,  physicians  and  surgeons,  and  members  of  their 
families,  or  the  exchange  of  passes  or  franks  between  such  telegraph 
and  telephone  corporations  or  between  such  corporations  and  such 
common  carriers,  for  their  officers,  agents,  employees,  attorneys, 
physicians  and  surgeons,  and  members  of  their  families:  nor  to 
prevent  the  carrying  out  of  contracts  for  free  or  reduced-rate  pas- 
senger transportation  heretofore  made,  founded  upon  adequate 
consideration  and  lawful  when  made:  nor  to  prevent  a  common 
earner  from  transporting,  storing  or  handling,  free  or  at  reduced 
rates,  the  household  goods  and  personal  effects  of  its  employees,  of 
persons  entering  or  leaving  its  service,  and  of  persons  killed  or  dying 
while  in  its  service. 

4.  Every  conmion  carrier  subject  to  the  provisions  of  this  act  may 
transport,  free  or  at  reduced  rates,  persons  or  property  for  the  United 
States,  state,  county  or  municipal  governments,  or  for  charitable 
purposes,  or  to  provide  relief  in  cases  of  general  epidemic,  pestilence 
or  other  calamitous  visitation,  and  property  to  or  from  fairs  or 
expositions  for  exhibit  thereat;  also  contractors  and  their  employees, 
material  or  supplies  for  use  or  engaged  in  carrying  out  their  contracts 
with  said  carriers,  for  construction,  operation  or  maintenance  work 
or  work  incidental  thereto  on  the  line  of  the  issuing  carrier,  to  the 
extent  only  that  such  free  or  reduced-rate  transportation  is  provided 
for  m  the  specifications  upon  which  the  contract  is  based  and  in  the 
contract  itself.  Common  carriers  may  also  enter  into  contracts  with 
telegraph  and  telephone  corporations  for  an  exchange  of  service. 

(h)      Except   as  m   this  section   otherwise  provided,   no  public   Schedule  rates 
utility  shall  charge,  demand,  collect  or  receive  a  greater  or  less  or    '^  ^^  charged, 
different  compensation  for  any  product  or  commodity  furnished  or 
to  be  furnished,  or  for  any  service  rendered  or  to  be  rendered,  than 
the  rates,  tolls,  rentals  and  charges  applicable  to  such  product  or 
commodity  or  service  as  specified  in  its  schedules  on  file  and  in  effect   Refunds 
at  the  time,  nor  shall  any  such  public  utility  refund  or  remit,  directly   P^^^^^'^^^d. 


Household    goods 
of  employees. 


Special  cases 
of  carriage 
of  persons 
or  property. 


]•■ 


192 


LOUIS  SLOSS  &  CO. 


PUBUC  UTILITIES  ACT 


193 


or  indirectly,  in  any  manner  or  by  any  device,  any  portion  of  Ac 
rates,  tolls,  rentals  and  charges  so  specified,  nor  extend  to  any 
corporation  or  person  any  form  of  contract  or  agreement  or  any  rule 
or  regulation  or  any  facility  or  privilege  except  such  as  are  regularly 
and  uniformly  extended  to  all  corporations  and  persons;  provided, 
that  the  commission  may  by  rule  or  order  estaWish  such  exceptions 
from  the  operation  of  this  prohibition  as  it  may  consider  just  and 
reasonable  as  to  each  public  utility. 

Filing  of  Interstate  Tariffs. 

Common       Sec.    18.      Every    common    carrier    and   every    telegraph    and 

caniers  must  telephone  corporation  shall  print  and  file  or  cause  to  be  filed  with 

file  copies  of  ^^  commission  schedules  showing  all  the  rates,  fares,  tolls,  renUls, 

mierstate  tariffs,  ^^ygg,    ^nj    classifications    for    the    transportation    of    persons    or 

property  or  the  transmission  of  messages  or  conversations  between  all 
points  within  this  state  and  all  pomts  without  the  state  upon  its  route, 
and  between  all  poinU  within  this  state  and  all  points  without  the 
state  upon  every  route  leased,  operated  or  controlled  by  it,  and 
between  all  poinU  on  its  route  or  upon  any  route,  leased,  operated 
or  controlled  by  it  within  this  state  and  all  poinU  without  the  state 
upon  the  route  of  any  other  common  carrier  or  telegraph  or  telephone 
corporation,  whenever  a  through  route  and  joint  rate  shall  have  been 
established  between  any  two  such  poinU. 


Public  utilities 

must  not  grant 

special 

privileges. 

Nor  discriminate 

betHfeen  localities 

nor  classes 

of  service. 


Preferences. 

Sec.  19.  No  public  utility  shall,  as  to  rates,  diarges,  service, 
facilities  or  in  any  other  respect,  make  or  grant  any  preference  or 
advantage  to  any  corporation  or  person  or  subject  any  corporation 
or  person  to  any  prejudice  or  disadvantage.  No  public  utility  shall 
establish  or  mamtain  any  unreasonable  difference  as  to  rates,  charges, 
service,  facilities  or  in  any  other  respect,  either  as  between  localities 
or  as  between  classes  of  service.  The  commission  shall  have  the 
power  to  determine  any  question  of  fact  arising  under  this  section. 

Economies:   Profit  from  to  Inure  to  Pubuc  Utility. 

Sec.  20.      NoAing  in  this  act  shall  be  taken  to  prohibit  any 
public  utility  from  itself  profiting,  to  the  extent  permitted  by  the 


commission,  from  any  economies,  efficiencies  or  improvements  which    Commission  may 
it  may  make,  and  from  distributing  by  way  of  dividends,  or  other-    permit  utilities 
wise  disposing  of,  the  profits  to  which  it  may  be  so  entitled,  and  the    to   increase 
commission   is  authorized  to  make   or  permit  such  arrangement  or    uividends     op 
arrangements  with  any  public  utility  as  it  may  deem  wise  for  the  „^^„^^;^/ 
purpose  of  encouraging  economies,  efficiencies  or  improvements  and 
securing  to  the  public  utility  making  the  same  such  portion,  if  any, 
of  the  profits  thereof  as  the  conmiission  may  determme. 


economies. 


Under  certain 
conditions  public 
utilities  may 
establish  a 
sliding  scale. 


Automatic 
adjustment 
of  rates. 


Sliding  Scale  of  Charges:  Profit  Sharing. 

Sec.  21.  Nothing  in  this  act  shall  be  taken  to  prohibit  a  cor- 
poration or  person  engaged  in  the  production,  generation,  transmission 
or  furnishing  of  heat,  light,  water  or  power,  or  telegraph  or  telephone 
service,  from  establishing  a  sliding  scale  of  charges;  provided,  that 
a  schedule  showing  such  scale  of  charges  shall  first  have  been  filed 
with  the  commission  and  such  schedule  and  each  rate  set  out  therein 
approved  by  it.  Nothing  in  this  act  shall  be  taken  to  prohibit  any 
such  corporation  or  person  from  entering  mto  an  arrangement  for  a 
fixed  period  for  the  automatic  adjustment  of  charges  for  heat,  light, 
water  or  power,  or  telegraph  or  telephone  service,  in  relation  to  the 
dividends  to  be  paid  to  stock  holders  of  such  corporation,  or  the 
profit  to  be  realized  by  such  person;  provided,  that  a  schedule 
showing  the  scale  of  charges  under  such  arrangement  shall  first  have 
been  filed  with  the  commission  and  such  schedule  and  each  rate  set 
out  therein  approved  by  it  Nothing  in  this  section  shall  prevent  the 
commission  from  revoking  its  approval  at  any  time  and  fixing  other 
rates  and  charges  for  the  product  or  commodity  or  service,  as 
authorized  by  this  act. 

Discrimination  Between  Utilities  inter  se  Prohibited: 

Connecting  Lines. 

Sec.  22.      (a)     Every  common  carrier  shall  afford  all  reason-  Common 

able,    proper    and    equal    facilities    for    the    prompt    and    efficient  carriers  must 

interchange  and  transfer  of  passengers,  tonnage  and  cars,  loaded  or  provide  facilities 

empty,  between  the  lines  owned,  operated,  controlled  or  leased  by  for  interchange 

it  and  the  lines  of  every  other  common  carrier,  and  shall  make  such  q,://,q„« 

interchange   and    transfer   prompdy   without   discrimination   between  discrimination. 


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LOUIS  SLOSS  &  CO. 


shippers,  passengers  or  carriers  either  as  to  compensation  charged, 
service  rendered  or  facilities  afforded.     Every  railroad  corporation 
shall  receive  from  every  other  railroad  corporation,  at  any  point  of 
connection,  freight  cars  of  proper  standard  and  in  proper  condition, 
and  shall  haul  the  same  either  to  destination,  if  the  destination  be 
upon  a  line  owned,  operated  or  controlled  by  such  railroad  cor- 
poration, or  to  point  of  transfer  according  to  route  billed,  if  the 
destination  be  upon  the  line  of  some  other  railroad  corporation. 
Joint  rates       Nothing  in  this  section  contained  shall  be  construed  as  in  anywise 
7|"^,'  ^^  limiting  or  modifying  the  duty  of  a  common  carrier  to  establish  joint 
established,  ^^^^^   ^^^^^  ^^^  charges  for  the  transportation  of  passengers  and 

property  over  the  lines  owned,  operated,  controlled  or  leased  by  il 
and  the  lines  of  other  common  carriers,  nor  as  in  any  manner  limiting 
or  modifying  the  power  of  the  commission  to  require  the  establishment 
of  such  joint  rates,  fares  and  charges. 

Telephone  and       ([,)      Every    telephone    corporation    and    telegraph    corporation 

telegraph  corpora-  ^^^^^  -^  ^]^  ,tatc  shall  receive,  transmit  and  deliver,  without 

%7ng7"'U!in7ss  discrimination  or  delay,  the  conversations  and  messages  of  every 

under  certain  other  telephone  or  telegraph  corporation  with  whose  line  a  physical 

conditions,  connection  may  have  been  made. 

False  Billing,  etc.,  by  Carrier  or  Shipper:   False 

Claims  for  Damages. 

False  hilling  and  Sec.  23.  (a)  No  common  carrier,  or  any  officer  Of  agent 
similar  offenses  ^„^i^  or  any  person  acting  for  or  employed  by  it,  shall,  by  meant 
prohibited.  ^^  ^^^^  j^j^  y^^^^^  classification,  weight,  weighing,  or  report  of 
weight,  or  by  any  other  device  or  means  assist,  suffer  or  permit  any 
corporation  or  person  to  obtain  transportation  for  any  person  or 
property  between  points  within  this  stete  at  less  than  the  rates  and 
fares  then  established  and  in  force  as  shown  by  the  schedules  filed 
and  in  effect  at  the  time.  No  person,  corporation,  or  any  officer, 
agent  or  employee  of  a  corporation  shall,  by  means  of  false  billing, 
false  or  inconect  classification,  false  weight  or  weij^g,  false 
representation  as  to  contents  or  substance  of  a  package,  or  false 
report  or  statement  of  weight,  or  by  any  other  device  or  means, 
whether  with  or  without  the  consent  or  connivance  of  a  common 


PUBLIC  UTILITIES  ACT 


195 


carrier  or  any  of  its  officers,  agents  or  employees,  seek  to  obtain  or 
obtain  such  transportation  for  such  property  at  less  than  the  rates 
then  established  and  in  force  therefor. 

(b)  No  person  or  corporation,  or  any  officer,  agent  or  employee  False  claims 
of  a  corporation,  shall  knowingly,  directly  or  indirectly,  by  any  false  prohibited. 
statement  or  representation  as  to  cost  or  value,  or  the  nature  or 
extent  of  an  injury,  or  by  the  use  of  any  false  billing,  bill  of  lading, 
receipt,  voucher,  roll,  account,  claim,  certificate,  affidavit  or  depo- 
sition, or  upon  any  false,  fictitious  or  fraudulent  statement  or  entry, 
obtain  or  attempt  to  obtain  any  allowance,  rebate  or  payment  for 
damage,  in  connection  with  or  growing  out  of  the  transportation  of 
persons  or  property,  or  an  agreement  to  transport  such  persons  or 
property,  whether  with  or  without  the  consent  or  connivance  of  a 
common  carrier  or  any  of  its  officers,  agents  or  employees;  nor  shall 
any  common  carrier,  or  any  officer,  agent  or  employee  thereof, 
knowingly  pay  or  offer  to  pay  any  such  allowance,  rebate  or  claim 
for  damage. 


Long  and  Short  Haul  and  Service. 

Sec.  24.  (a)  No  common  carrier  subject  to  the  provisions  of 
this  act  shall  charge  or  receive  any  greater  compensation  m  the 
aggregate  for  the  transportation  of  persons  or  of  a  like  kind  of 
property  for  a  shorter  than  for  a  longer  distance  over  the  same  line 
or  route  in  the  same  direction,  within  this  state,  the  shorter  being 
included  within  the  longer  distance,  or  charge  any  greater  compen- 
sation as  a  through  rate  than  the  aggregate  of  the  intermediate  rates; 
but  this  shall  not  be  construed  as  authorizing  any  such  common 
carrier  to  charge  or  receive  as  great  a  compensation  for  a  shorter  as 
for  a  longer  distance  or  haul.  Upon  application  to  the  commission, 
such  common  carrier  may.  in  special  cases,  after  investigation,  be 
authorized  by  the  commission  to  charge  less  for  a  longer  than  for 
a  shorter  distance  for  the  transportation  of  persons  or  property,  and 
the  commission  may  from  time  to  time  prescribe  the  extent  to  which 
•uch  carrier  may  be  relieved  from  the  operation  and  requirements 
of  this  section. 

(b)  No  telephone  or  telegraph  corporation  subject  to  the  pro- 
visions of  this  act  shall  charge  or  receive  any  greater  compensation 


Regulation  of 
long  and  short 
haul  rates. 


Regulation  of 
long  and  short 
distance   telephone 
and  telegraph 
rates. 


.IV 


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196 


LOUIS  SLOSS  &  CO. 


in  the  aggregate  for  the  transmission  of  any  long  distance  message 
or  conversation  for  a  shorter  than  for  a  longer  distance  over  the 
same  line  or  route  in  tfie  same  direction,  within  this  state,  the  shorter 
being  included  within  the  longer  distance,  or  charge  any  greater 
compensation  for  a  through  service  than  the  aggregate  of  the  inter- 
mediate rates  or  tolls  subject  to  the  provisions  of  this  act;  but  this 
shall  not  be  construed  as  authorizing  any  such  telephone  or  telegraph 
corporation  to  charge  and  receive  as  great  a  compensation  for  a 
shorter  as  for  a  longer  distance.  Upon  application  to  the  commission, 
a  telephone  or  telegraph  corporation  may,  in  special  cases,  after 
investigation,  be  authorized  by  the  commission  to  charge  less  for  a 
longer  than  for  a  shorter  distance  service  for  the  transmission  of 
messages  or  conversations,  and  the  commission  may  from  tune  to  time 
prescribe  the  extent  to  which  such  telephone  or  telegraph  corporation 
may  be  relieved  from  the  operation  and  requirements  of  this  section. 

Switch  and  Spur  Connections. 

Railroads      Sec.  25.     (a)     Every  railroad  corporation,  upon  the  application 

must  provide  of  any  corporation  or  person,  being  a  shipper  or  receiver  or  contem- 

sJifitchcs  and  plated  shipper  or  receiver  of  freight,  for  a  connection  between  the 

spur  tracks  upon  railroad  of  such  railroad  corporation  and  any  existmg  or  contemplated 

application,  private  track,  tracks  or  railroad  of  such  corporation  or  person,  shall 

make  such  connection  and  provide  such  switches  and  tracks  as  may 

be  necessary  for  that  purpose  and  deliver  and  receive  cars  thereover; 

provided,  that  such  connection  is  reasonably  practicable  and  can  be 

installed  and  used  without  materially  increasing  the  hazard  of  the 

operation  of  the  railroad  with  which  such  connection  is  sought,  and 

that  the  business  which  may  reasonably  be  expected  to  be  received 

by  such  railroad  corporation  over  such  connection  is  sufficient  to 

justify  the  expense  of  such  connection  to  such  railroad  corporation. 

(h)     Under  the  conditions  specified  in  the  proviso  in  sub-section 

(a)  hereof,  every  railroad  corporation,  upon  the  application  of  any 

Spurs    on   rail-  ^^^^^^^^j^  ^  ptnon,  being  a  shipper  or  receiver  or  contemplated 

plop^t".  »*iiPP«'  o'  receiver  of  freight,  shall  construct  upon  its  right  of  way 

a  spur  or  spurs  for  the  purpose  of  receiving  and  delivering  freight 

thereby,  and  shall  receive  and  deliver  freight  thereby. 


PUBUC  UTILITIES  ACT 


197 


Foreign  Public  Utilities  Excluded. 

Sec.  26.     No  foreign  corporation,  other  than  tfiose  which  by  a  Limitation 
compliance  with  the  laws  of   this  state  are  entitled  to  transact  a  P'^^f"  ^" 
public   utility  business   within   this  state,    shall   henceforth   transact    .-i*. 
within  this  state  any  public  utility  business,  nor  shall  any  foreign  corporations, 
corporation  which  is  at  present  lawfully  transacting  business  within 
this  state  henceforth  transact  withm   this   state   any  public   utility 
business  of  a  character  different  from  that  which  it  is  at  present 
authorized  by  its  charter  or  articles  of  incorporation  to  transact,  nor 
shall  any  license,  permit  or  franchise  to  own,  control,  operate  or 
manage  any  public  utility  business  or  any  part  or  incident  thereof 
be  henceforth  granted  or  transferred,  directly  or  indirectly,  to  any 
foreign    corporation    which    is    not   at   present    lawfully    transacting 
within  this  state  a  public  utility  business  of  like  character;  provided, 
that  foreign  corporations  engaging  in  commerce  with  foreign  nations 
or  commerce  among  the  several  states  of  this  Union  may  transact 
within  this  state  such  commerce  and  intrastate  commerce  of  a  like 
character. 

Fares  and  Transfers  on  Street  Railroads. 

Sec.   27.      No   street  or   interurban  railroad   corporation   shall  Street  car  fare 

charge,   demand,   collect  or  receive  more   than   five  cents   for  one  ^'^^''"  ""'^^  ^''"'^* 

....  L'xcelit ... 

continuous  ride  in  the  same  general  direction  within  the  corporate 

limits  of  any  city  and  county,  or  city  or  town,  except  upon  a  showing 
before  the  commission  that  such  greater  charge  is  justified;  provided, 
that  until  the  decision  of  the  commission  upon  such  showing,  a  street 
or  interurban  railroad  corporation  may  continue  to  demand,  collect 
and  receive  the  fare  in  effect  on  Octobe«  10,  1 9 1 1 ,  or  at  the  time 
the  commission  acquires  as  to  such  corporation  the  power  to  fix  fares 
within  such  city  and  county,  or  city  or  town.  Every  street  or 
interurban  railroad  corporation  shall  upon  such  terms  as  the  com- 
mission shall  find  to  be  just  and  reasonable  furnish  to  its  passengers 
transfers  entitling  them  to  one  continuous  trip  in  the  same  general  Transfers  mus( 
direction  over  and  upon  the  portions  of  its  lines  within  the  same  city  -^  given.  .  . 
and  county,  or  city  or  town,  not  reached  by  the  originating  car. 


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LOUIS  SLOSS  &  CO. 


All  public 

utilities  must 

furnish  desired 

information. 


Must  answer 
all  questions. 


Must  furnish 

copies  of 

records. 

Complete 

inventory  of 

property^. 

Information 

confidential 

unless  ordered 

published  b\f 

commission. 

Violation  of 

confidence  a 

misdemeanor. 


Requests  for  Information:   Blanks:  Copies  of  Record. 

Sec.  28  (a)  Every  public  utility  shall  furnish  to  the  commission 
in  such  fonn  and  such  detail  as  the  commission  shall  prescribe  all 
tabulations,  computations  and  all  other  information  required  by  it 
to  carry  into  effect  any  of  the  provisions  of  this  act,  and  shall  make 
specific  answers  to  all  questions  submitted  by  the  commission. 

(b)  Every  public  utility  receiving  from  the  commission  any 
blanks  with  directions  to  fill  the  same  shall  cause  the  same  to  be 
properly  filled  out  so  as  to  answer  fully  and  correctly  each  question 
propounded  therein;  in  case  it  is  unable  to  answer  any  question,  it 
shall  give  a  good  and  sufficient  reason  for  such  failure. 

(c)  Whenever  required  by  the  commission,  every  public  utflity 
shall  deliver  to  the  commission  copies  of  any  or  all  maps,  profiles, 
contracts,  agreements,  franchises,  reports,  books,  accounts,  papers 
and  records  in  its  possession  or  in  any  way  relating  to  its  property 
or  affecting  its  business,  and  also  a  complete  inventory  of  all  its 
property  in  such  form  as  the  commission  may  direct 

(d)  No  information  furnished  to  the  commission  by  a  public 
utility,  except  such  matters  as  are  specifically  required  to  be  open  to 
public  inspection  by  the  provisions  of  this  act,  shall  be  open  to  public 
inspection  or  made  public  except  on  order  of  the  commission,  or  by 
the  commission  or  a  commissioner  in  the  course  of  a  hearing  or 
proceeding.  Any  officer  or  employee  of  the  commission  who,  in 
violation  of  the  provisions  of  this  sub-section,  divulges  any  such 
information  shall  be  guilty  of  a  misdemeanor. 

Reports. 


All  public        Sec   29.      Every   public   utility   shall   annually   furnish   to   the 

utdiUes  must    commission  at  such  time  and  in  such  form  as  the  commission  may 

repor     annua  \f.    ^^^^^^  ^  ^^^^^  -^  ^j^j^  ^^  ^^^  ^j^^j   ^p^^^^^^^y  g^g^„  ^\\ 

questions  propounded  by  the  commission  upon  or  concerning  which 
the  commission  may  desire  information.  The  commission  shall  have 
authority  to  require  any  public  utility  to  file  monthly  reports  of 
earnings  and  expenses,  and  to  file  periodical  or  special,  or  both 
periodical  and  special  reports  concerning  any  matter  about  which 


PUBUC  UTILITIES  ACT 


199 


the  commission  is  authorized  by  this  or  any  other  act  to  inquire  or 
to  keep  itself  informed,  or  which  it  is  required  to  enforce.  All 
reports  shall  be  under  oath  when  required  by  the  commission. 

Compliance  with  Commission's  Orders. 

Sec.  30.     Every  public  utility  shall  obey  and  comply  with  each  Public  utilities 
and  every  requirement  of  every  order,  decision,  direction,   rule  or  shall  ofcep 

regulation   made   or  prescribed   by   the   commission   in  the  matters  ^"  orders  of 

I       .  •<•    1  M^i  .»       •  1  M^'       »  commission, 

herem  specihed,  or  any   other  matter  m  any  way  relating  to   or 

affecting  its  business  as  a  public  utility,  and  shall  do  everything 
necessary  or  proper  in  order  to  secure  compliance  with  and  observ- 
ance of  every  such  order,  decision,  direction,  rule  or  regulation  by 
all  of  its  officers,  agents  and  employees. 

ARTICLE  III. 
POWERS  AND  DUTIES  OF  RAILROAD  COMMISSION. 

Powers  of  Commission. 

Sec  31.     The  railroad  commission  is  hereby  vested  with  power  Commission /o 
and  jurisdiction  to  supervise  and  regulate  every  public  utility  in  the  control  all 
state  and  to  do  all  things,   whether  herein  specifically  designated  ^"^"^  "^"''^^^• 
or  in  addition  thereto,  which  are  necessary  and  convenient  in  the 
exercise  of  such  power  and  jurisdiction. 

Charges  to  Be  Fixed  by  Commission. 

Sec  32.  (a)  Whenever  the  commission,  after  a  hearing  had  To  fix  rates. 
upon  its  own  motion  or  upon  complaint,  shall  find  that  the  rates, 
fares,  tolls,  rentals,  charges  or  classifications,  or  any  of  them, 
demanded,  observed,  charged  or  collected  by  any  public  utility  for 
any  service  or  product  or  commodity,  or  in  connection  therewith, 
including  the  rates  or  fares  for  excursion  or  commutation  tickets,  or 
that  the  rules,  regulations,  practices  or  contracts,  or  any  of  them, 
affecting  such  rates,  fares,  tolls,  rentals,  charges  or  classifications, 
or  any  of  them,  are  unjust,  unreasonable,  discriminatory  or  prefer- 
ential, or  in  anywise  in  violation  of  any  provision  of  law,  or 
that  such  rates,  fares,  tolls,  rentals,  charges  or  classifications  are 
insufficient,  the  commission  shall  determine  the  just,  reasonable  or 


200 


LOUIS  SLOSS  &  CO. 


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If 


I' 


sufficient  rates,  fares,  tolls,  rentals,  charges,  classifications,  rules, 
regulations,  practices  or  contracts  to  be  thereafter  observed  and  in 
force,  and  shall  fix  the  same  by  order  as  hereinafter  provided. 

To  fix  single  (^)  -j^it  commission  shall  have  power,  upon  a  hearing,  had 
^  %  T]  "P®°  ^^  °^°  motion  or  upon  complaint,  to  investigate  a  single  rate, 
fare,  toll,  rental,  charge,  classification,  rule,  regulation,  contract  or 
practice,  or  any  number  thereof,  or  the  entire  schedule  or  schedules 
of  rates,  fares,  tolls,  rentals,  charges,  classifications,  rules,  regula- 
tions, contracts  and  practices,  or  any  thereof,  of  any  public  utility, 
and  to  establish  new  rates,  fares,  tolls,  rentals,  charges,  classifications, 
rules,  regulations,  contracts  or  practices,  or  schedule  or  schedules, 
in  lieu  thereof. 


To  fix  joint 
rates. 


Ma\?  order 

through  car 

service. 


Ma^  establish 

division  of  rates 

on  through 

business. 


Joint  Rates  and  Through  Routes  on  Common  Carriers. 

Sec.  33.  Whenever  the  commission,  after  a  hearing  had  upon 
its  own  motion  or  upon  complaint,  shall  find  that  the  rates,  fares 
or  charges  m  force  over  two  or  more  common  carriers,  between  any 
two  points  in  this  state,  are  unjust,  unreasonable  or  excessive,  or  that 
no  satisfactory  through  route  or  joint  rate,  fare  or  charge  exists 
between  such  points,  and  that  the  public  convenience  and  necessity 
demand  the  establishment  of  a  through  route  and  joint  rate,  fare 
or  charge  between  such  points,  the  commission  may  order  such 
common  carriers  to  establish  such  through  route  and  may  establish 
and  fix  a  joint  rate,  fare  or  charge  which  will  be  fair,  just,  reason- 
able and  sufficient,  to  be  followed,  charged,  enforced,  demanded 
and  collected  in  the  future,  and  the  terms  and  conditions  under 
which  such  through  route  shall  be  operated.  The  commission  may 
order  that  freight  moving  between  such  points  shall  be  carried  by 
the  ditferent  common  carriers,  parties  to  such  through  route  and 
joint  rate,  without  being  transfened  from  the  originating  cars.  In 
case  the  common  carriers  do  not  agree  upon  the  division  between 
them  of  the  joint  rates,  fares  or  charges  established  by  the  comaiis^ 
tion  over  such  through  routes,  the  commission  shall,  after  hearing, 
by  supplemental  order,  establish  such  division;  provided,  that  where 
any  railroad  which  is  made  a  party  to  a  through  route  has  itself 
over  its  own  line  an  equally  satisfactory  through  route  between  the 


hi 


PUBUC  UTILITIES  ACT 


201 


termini  of  die  through  route  established,  such  railroad  shall  have 

the  right  to  require  as  its  division  of  the  jomt  rate,  fare  or  charge 

its  local  rate,  fare  or  charge  over  the  portion  of  its  line  comprised 

in  such  through  route,  and  the  commission  may,  in  its  discretion, 

allow  to  such  railroad  more  than  its  local  rate,  fare,  or  charge    _ 

whenever  it  will  be  equitable  so  to  do.     The  commission  shall  have      ^  ^^  ^° 

the  power  to  establish  and  fix  through  routes  and  joint  rates,  fares   common  carriers 

or  charges  over  common  carriers  and  stage  or  auto  stage  lines  and   stage  and  auto 

to  fix  the  division  of  such  joint  rates,  fares  or  charges.  &tage  lines. 


To  investigate 
interstate  rates, 
etc. 


Interstate  Rates. 

Sec.  34.  The  commission  shall  have  the  power  to  investigate 
all  existing  or  proposed  interstate  rates,  fares,  tolls,  charges  and 
classifications,  and  all  rules  and  practices  in  relation  thereto,  for  or 
in  relation  to  the  transportation  of  persons  or  property  or  the  trans- 
mission of  messages  or  conversations,  where  any  act  in  relation 
thereto  shall  take  place  within  diis  state;  and  when  the  same  are, 
in  the  opinion  of  the  conmiission,  excessive  or  discriminatory  or  in 
violation  of  the  act  of  congress  entitled  **An  act  to  regulate  com- 
merce,** approved  February  fourth,  eighteen  hundred  and  eighty- 
seven,  and  the  acts  amendatory  thereof  and  supplementary  thereto, 
or  of  any  other  act  of  congress,  or  in  conflict  with  the  rulings,  orders 
or  regulations  of  the  Interstate  Commerce  Commission,  the  conmiis- 
sion may  apply  by  petition  or  otherwise  to  the  Interstate  Conunerce 
Commission  or  to  any  court  of  competent  jurisdiction  for  relief. 

Service,  Equipment,  Facilities — to  Be  Fixed  by  the 

Commission. 

Sec  35.     Whenever  the  commission,  after  a  hearing  had  upon  Commission  to 

its  own  motion  or  upon  complaint,  shall  find  that  the  rules,  regula-  protect  public 

tions,  practices,  equipment,   appliances,   facilities  or  service  of  any  hom  poor 

public  utility,  or  the  methods  of  manufacture,   distribution,   trans-  f^^J^^  ^^ 

,  ,        ,  ,      .  .  , ,       madequatt 

mission,  storage  or  supply  employed  by  it,  are  unjust,  unreasonable,  facilities 

unsafe,   improper,   inadequate   or   insufficient,    the   commission   shall 

determine  the  just,  reasonable,  safe,  proper,  adequate  or  sufficient 

rules,  regulations,  practices,  equipment,  appliances,  facilities,  service 

or   methods   to   be   observed,    furnished,    constructed,    enforced   or 


Ma})  petition 
Interstate 
Commerce 
Commission. 


1 


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i 


') 


^^. 


\l 


202 


LOUIS  SLOSS  &  CO. 


employed  and  shall  fix  the  same  by  its  order,  rule  or  regulation. 
The  commission  shall  prescribe  rules  and  regulations  for  the  per- 
formance of  any  service  or  the  furnishing  of  any  commodity  of  the 
character  furnished  or  supplied  by  any  public  utility,  and.  on  proper 
demand  and  tender  of  rates,  such  public  utility  shall  furnish  such 
commodity  or  render  such  service  within  the  time  and  upon  the 
conditions  provided  in  such  rules. 

Power  of  Commission  to  Order  Additions.  Improvements. 

Chances. 


Commission 

ma^  order 

extensions  and 

improvements 

of  service, 

Neiv  buildings 

for  convenience 

of  employ^ees 

or  public. 


May  specif  }f 

manner  of 

building 

and  site. 


Ma]f  order 
joint  action  fcp 
public  utilities. 


Sec.  36.     Whenever  the  commission,  after  a  hearing  had  upon 
its  own  motion  or  upon  complaint,  shall  find  that  additions,  exten- 
sions, repairs  or  improvements  to,  or  changes  in.  the  existing  plant, 
equipment,  apparatus,   facilities  or  other  physical  property  of  any 
public  utility  or  of  any  two  or  more  public  utilities  ought  reasonably 
to  be  made,  or  that  a  new  structure  or  structures  should  be  erected, 
to  promote  the  security  or  convenience  of  its  employees  or  the  public, 
or  in  any  other  way  to  secure  adequate  service   or  facilities,   the 
commission   shall   make    and   serve    an    order   directing   that   such 
additions,  extensions,  repairs,  improvements  or  changes  be  made  or 
such  structure  or  structures  be  erected  in  the  manner  and  within 
the  time  specified   in   said  order.      If   the   commission   orders   the 
erection  of  a  new  structure,  it  may  also  fix  the  site  thereof.     If  any 
additions,  extensions,  repairs,  improvements  or  changes,  or  any  new 
structure   or   structures   which   the   commission   has   ordered   to   be 
erected,  require  joint  action  by  two  or  more  public  utilities,   the 
commission  shall  notify  the  said  public  utilities  that  such  additions, 
extensions,   repairs,   improvements  or  changes  or  new  structure  or 
structures  have  been  ordered  and  that  the  same  shall  be  made  at 
their  joint  cost,  whereupon  the  said  public  utilities  shall  have  such 
reasonable  time  as  the  commission  may  grant  within  which  to  agree 
upon  the  portion  or  division  of  cost  of  such  additions,   extensions, 
repairs,  improvements  or  changes  or  new  structure  or  structures,  which 
each  shall  bear.     If  at  the  expiration  of  such  time  such  public  utilities 
shall  fail  to  file  with  the  commission  a  statement  that  an  agreement 
has  been  made  for  a  division  or  apportionment  of  the  cost  or  expense 
of  such  additions,  extensions,  repairs,  improvements  or  changes,  or 


PUBLIC  UTILITIES  ACT 


203 


new   structure   or  structures,    die  commission   shall   have   audiority.  Commission 

after  further  hearing,  to  make  an  order  fixing  the  proportion  of  such  "^^}f  fi^ 

cost  or  expense  to  be  borne  by  each  public  utility  and  the  manner  P^fP^^  *°" 

,  .  ,     ,  ,     ,  ,  .,  J  of  expense  and 

m  which  the  same  shall  be  paid  or  secured.  manner  paid 

Power  of  Commission  to  Order  Chances  in  Time  Sched- 
ules AND  RUNNINC  OF  ADDITIONAL  CaRS  AND  TRAINS. 


Sec.  37.  Whenever  the  commission,  after  a  hearing  had  upon 
its  own  motion  or  upon  complaint,  shall  find  that  any  railroad 
corporation  or  street  railroad  corporation  does  not  run  a  sufficient 
number  of  trains  or  cars,  or  possess  or  operate  sufficient  motive  power, 
reasonably  to  accommodate  the  traffic,  passenger  or  freight,  trans- 
ported by  or  offered  for  transportation  to  it,  or  does  not  nm  its 
trains  or  cars  with  sufficient  frequency  or  at  a  reasonable  or  proper 
time  having  regard  to  safety,  or  does  not  stop  the  same  at  proper 
places,  or  does  not  run  any  train  or  trains,  car  or  cars,  upon  a 
reasonable  time  schedule  for  the  nm,  the  commission  shall  have 
power  to  make  an  order  directing  any  such  railroad  corporation  or 
street  railroad  corporation  to  mcrease  the  number  of  its  trains  or  of 
its  cars  or  its  motive  power  or  to  change  the  time  for  starting  its 
trains  or  cars  or  to  change  the  time  schedule  for  the  run  of  any  train 
or  car,  or  to  change  the  stopping  place  or  places  thereof,  or  to  make 
any  other  order  that  the  commission  may  determine  to  be  reasonably 
necessary  to  accommodate  and  transport  the  traffic,  passenger  or 
freight,  transported  or  offered  for  transportation. 

Track  Connections. 


Commission 
may  order 
sufficient 
number  trains 
to  accommodate 
traffic. 


May  change 
schedules. 

May  change 
stopping  places 
or  make  other 
reasonable 
regulations 
for  the 

accommodation 
of  the  public. 


Sec.  38.     Whenever  the  commission,  after  a  hearing  had  upon  Commission  may 
its   own   motion   or   upon   complaint,    shall    find    that    the   public  order  track 
convenience  and  necessity  would  be  subserved  by  having  connections  connections 
made  between  the  tracks  of  any  two  or  more  railroad  or  street      .>       ,        , 
railroad  corporations,  so  that  cars  may  readily  be  transferred  from  ^i^^d  ^ar  lines, 
one  to  the  other,  at  any  of  the  points  hereinafter  in  this  section 
specified,  the  commission  may  order  any  two  or  more  such  corpora- 
tions owning,  controlling,  operating  or  managing  tracks  of  the  same 
gauge  to  make  physical  connections  at  any  and  all  crossings,  and  at 
all  points  where  a  railroad  or  street  railroad  shall  begin  or  terminate 


i 


I. 
I 


204 


LOUIS  SLOSS  &  CO. 


PUBUC  UTILITIES  ACT 


205 


V 

l> 

r  ' 

1 

V 

.1 

1 

li 

or  run  near  to  any  other  railroad  or  street  railroad.  After  the 
necessary  franchise  or  permit  has  been  secured  from  the  city  and 
county,  or  city  or  town,  the  commission  may  likewise  order  such 
physical  connection,  within  such  city  and  county,  or  city  or  town, 
between  two  or  more  railroads  which  enter  the  limits  of  the  same. 
Map  fix  The   commission    shall   by    order    direct   whether    the    expense    of 

proportion  the  connections  referred  to  m  this  section  shall  be  borne  jointly  or 

of  expense,   otherwise. 


Commission  ma\) 

order  srvitches 

and  spur  tracks 

and  prescribe 

terms  for  use. 


Ma})  require 
switching 
service  io 

private  spurs. 


Switch  and  Spur  Connections:   Interchange  Switching 

TO  Industrial  Tracks. 

Sec.  39.  (a)  Whenever  the  commission,  after  a  hearing  had 
upon  its  own  motion  or  upon  complaint,  shall  find  that  application 
has  been  made  by  any  corporation  or  person  to  a  raOroad  corporation 
for  a  connection  or  spur  as  provided  in  section  25  of  this  act,  and 
that  the  railroad  corporation  has  refused  to  provide  such  connection 
or  spur  and  that  the  applicant  is  entided  to  have  the  same  provided 
for  him  under  said  section  25,  the  commission  shall  make  an  order 
requiring  the  providmg  of  such  connection  or  spur  and  the  main- 
tenance and  use  of  the  same  upon  reasonable  terms  which  the 
commission  shall  have  the  power  to  prescribe.  Whenever  any  such 
connection  or  spur  has  been  so  provided,  any  corporation  or  person 
shall  be  entided  to  connect  with  the  private  track,  tracks  or  railroad 
thereby  connected  with  the  railroad  of  the  railroad  corporation  and 
to  use  the  same  or  to  use  the  spur  so  provided  upon  payment  to  the 
party  or  parties  incurring  the  primary  expense  of  such  private  track, 
tracks  or  railroad,  or  the  connection  therewith  or  of  such  spur,  of 
a  reasonable  proportion  of  the  cost  thereof  to  be  determined  by  the 
commission  after  notice  to  the  interested  parties  and  a  hearing  thereon ; 
provided,  that  such  connection  and  use  can  be  made  without 
unreasonable  interference  with  the  rights  of  the  party  or  parties 
mcurring  such  primary  expense. 

(b)  The  commission  shall  likewise  have  the  power  to  require 
one  railroad  corporation  to  switch  to  private  spurs  and  industrial 
tracks  upon  its  own  railroad  the  cars  of  a  connecting  railroad 
corporation  and  to  prescribe  the  terms  and  compensation  for  such 
service. 


Commission  map 
order  physical 
connections 
between 
telephone  and 
telegraph     lines 
in  specified  cases. 


Physical  Connections  and  Joint  Rates — ^Telephone  and 

Telegraph  Corporations. 

Sec.  40.     Whenever  the  conmiission.  after  a  hearing  had  upon 
its   own   motion    or   upon    complaint,    shall    find   that    a   physical 
connection  can  reasonably  be  made  between  the  lines  of  two  or 
more  telephone  corporations  or  two  or  more  telegraph  corporations 
whose  lines  can  be  made  to  form  a  continuous  line  of  communication, 
by  die  construction  and  maintenance  of  suitable  connections  for  the 
transfer  of  messages  or  conversations,  and  that  public  convenience 
and  necessity  will  be  subserved  thereby,  or  shall  find  that  two  or 
more  telegraph  or  telephone  corporations  have  failed  to  establish 
joint  rates,  tolls  or  charges  for  service  by  or  over  their  said  lines, 
and  that  joint  rates,  tolls  or  charges  ought  to  be  established,  die 
commission  may,  by  its  order,  require  that  such  connection  be  made, 
except  where  die  purpose  of  such  connection  is  primarily  to  secure 
the  transmission  of  local  messages  or  conversations  between  points 
within  the  same  city  and  county,  or  city  or  town,  and  that  conver- 
sations be  transmitted  and  messages  transferred  over  such  connection 
under  such  rules  and  regulations  as  the  commission  may  establish, 
and  prescribe  through  lines  and  joint  rates,  tolls  and  charges  to  be 
made,  and  to  be  used,  observed  and  in  force  in  the  future.     If  such 
telephone  or  telegraph  corporations  do  not  agree  upon  the  division 
between  them  of  the  cost  of  such  physical  connection  or  connections 
or  the  division  of  the  joint  rates,  tolls  or  charges  established  by  the 
commission   over   such    through    lines,    the    commission    shall    have 
authority,    after    further    hearing,    to    establish    such    division    by 
supplemental  order. 

Use  of  Joint  Facilities. 

Sec.  41.     Whenever  the  commission,  after  a  hearing  had  upon  J^ ay  order 
its  own  motion  or  upon  complaint  of  a  public  utility  affected,  shall  joint  use  of 
find  diat  public  convenience  and  necessity  require  the  use  by  one  facilities  and 
public  utility  of  the  conduits,  subways,  tracks,  wires,  poles,  pipes  e</uipmen/    oru 
or  other  equipment,  or  any  part  thereof,  on,  over,  or  under  any  street 
or  highway,  and  belonging  to  another  public  utility,  and  that  such 
use  will  not  result  in  irreparable  injury  to  the  owner  or  other  users 
of   such   conduits,    subways,    tracks,    wires,    poles,   pipes   or   other 


> 


May  fix  joint 
telephone  and 
telegraph  rates. 


r 


\i\: 


i 


. 


\u 


I 


't 


206 


LOUIS  SLOSS  &  CO. 


equipment  or  in  any  substantial  detriment  to  the  service,  and  that 
such  public  utilities  have  failed  to  agree  upon  such  use  or  the  terms 
and  conditions  or  compensation  for  the  same,  the  commission  may 
by  order  direct  that  such  use  be  permitted,  and  prescribe  a  reasonable 
compensation  and  reasonable  terms  and  conditions  for  the  jomt  use. 
Public  utilit\f  If  such  use  be  directed,  the  public  utility  to  whom  the  use  is 
permitted  shall  be  liable  to  the  owner  or  other  users  of  such  con- 
duits, subways,  tracks,  wires,  poles,  pipes  or  other  equipment  for 
such  damage  as  may  result  therefrom  to  the  property  of  such  owner 
or  other  users  thereof. 


using  other 
public  uiililies* 


equipment 
liable  for 
damage. 


Health  and  Safety:    Safety  Devices. 


Commission  to       Sec.   42.      The  commission  shall  have  power,   after  a  hearing 
protect  health  jj^^j  ^pon  its  own  motion  or  upon  complaint,  by  general  or  special 
^^  ^°j^,f^  orders,   rules  or  regulations,  or  otherwise,  to  require  every  public 
of  pu    ic,  ^^j.^   ^^  maintain  and  operate  its  line,   plant,  system,   equipment, 
apparatus,  tracks  and  premises  in  such  manner  as  to  promote  and 
safeguard    the    health    and    safety    of    its    employees,    passengers, 
customers,   and   the  public,   and  to  this  end  to  prescribe,   among 
other   things,    the   insuUation.   use,   maintenance   and   operation   of 
appropriate  safety  or  other  devices  or  appliances,  including  mler- 
locking  and  other  protective  devices  at  grade  crossings  or  junctions 
and  block  or  other  systems  of  signalling,  to  establish  uniform  or 
other  standards  of  equipment,  and  to  require  the  performance  of 
any  other  act  which  the  health  or  safety  of  ite  employees,  passen- 
gers, customen  or  the  public  may  demand. 

Grade  Crossings. 

Grade       Sec.  43.      (fl)      No  public  road,  highway  or  street  shall  here- 

crossings  ^f^gj  }^  constructed  across  the  track  of  any   railroad  corporation 

prohibited,  ^^    ^^j^^    ^^^^   ^^i     ^^    j^^^k   of    any    railroad    corporation   be 

except.  .  .  ^^^^^^^^  ^^.^ss  a  public  road,  highway  or  street  at  grade,  nor 

shall   the  track  of  any  railroad  corporation  be   constructed   across 

the  track  of  any  other  railroad  or  street  railroad  corporation   at 

grade,    nor    shall    the    track    of    a    street   railroad    corporation    be 

constructed   across   the   track   of   a   railroad   corporation   at   grade. 

witfiout   having    first    secured    the   permission    of     the    commission; 


PUBLIC  UTILITIES  ACT 


207 


provided,  that  this  subsection  shall  not  apply  to  the  replacement 
of  lawfully  existing  tracks.  The  commission  shall  have  the  right 
to  refuse  its  permission  or  to  grant  it  upon  such  terms  and  conditions 
as  it  may  prescribe. 


(b)  The  commission  shall  have  the  exclusive  power  to 
determine  and  prescribe  the  manner,  including  the  particular  point 
of  crossing,  and  the  terms  of  installation,  operation,  maintenance, 
use  and  protection  of  each  crossing  of  one  railroad  by  another 
railroad  or  street  railroad,  and  of  a  street  railroad  by  a  railroad, 
and  of  each  crossing  of  a  public  road  or  highway  by  a  railroad 
or  street  railroad  and  of  a  street  by  a  railroad  or  vice  versa, 
subject  to  the  provisions  of  section  2694  of  the  Political  Code,  so 
far  as  applicable,  and  to  alter  or  abolish  any  such  crossing,  and 
to  require  where,  in  its  judgment,  it  would  be  practicable,  a 
separation  of  grades  at  any  such  crossing  heretofore  or  hereafter 
established  and  to  prescribe  the  terms  upon  which  such  separation 
shall  be  made  and  the  proportions  in  which  the  expense  of  the 
alteration  or  abolition  of  such  crossings  or  the  separation  of  such 
grades  shall  be  divided  between  the  railroad  or  street  railroad 
corporations  affected  or  between  such  corporations  and  the  state, 
county,  municipality  or  other  public  authority  in  interest. 

Investigation  of  Accidents:  Reports  to  Commission. 

Sec.  44.  The  commission  shall  investigate  the  cause  of  all 
accidents  occurring  within  this  state  upon  the  property  of  any 
public  utility  or  directly  or  indirectly  arising  from  or  connected 
with  its  maintenance  or  operation,  resulting  in  loss  of  life  or 
mjury  to  person  or  property  and  requiring,  in  the  judgment  of  the 
commission,  investigation  by  it.  and  shall  have  the  power  to  make 
such  order  or  reconunendation  with  re^>ect  thereto  as  in  its 
judgment  may  seem  just  and  reasonable;  provided,  that  neither 
the  order  or  recommendation  of  the  commission  nor  any  accident 
report  filed  with  the  commission  shall  be  admitted  as  evidence  in 
any  action  for  damages  based  on  or  arising  out  of  the  loss  of 
life,  or  injury  to  person  or  property,  in  this  section  referred  to. 
Every  public  utility  is  hereby  required  to  file  with  the  commission. 


All  railroad 
crossings  under 
jurisdiction  of 
Commission. 


May  abolish 
crossings. 

Ma))  require 
separation  of 
grades. 


Cost  of  work  to 
be  divided. 


All  accidents 
involving 
public  utilities 
shall  be 
immediateljf 
reported  to 
Commission. 


\ 


Power  of  Com- 
mission to 
investigate. 


206 


LOUIS  SLOSS  &  CO. 


PUBLIC  UTILITIES  ACT 


JOf 


III 


i  I 


r 

1 

[; 

1^ 

U 

under  such  rules  and  regulations  as  the  commission  may  prescribe, 
a  report  of  each  accident  so  occurring  of  such  kinds  or  classes  as 
the  commission  may  from  time  to  time  designate. 

Power  of  Commission  to  Provide  Rules  for  Expediting 

Traffic:  EIxpress  and  Telegraph  Rules 

AND  Regulations. 


Commission  to 
establish    demur- 
rage rules. 


Time  aUon>ed 

for  loading 

or  unloadins. 


Fix  demurra2>i 
charges. 


Fix  zones  for 

free  deliver}^  of 

express 

pacf(ages^ 

telephone  and 

telegraph 

messages. 


Sec.  45.  (a)  The  commission  shall  have  power  to  provide 
by  proper  rules  and  regulations  the  time  within  which  all  railroad 
corporations  shall  furnish,  after  demand  therefor,  all  cars,  equipment 
and  facilities  necessary  for  the  handling  of  freight  in  carload  and 
less  than  carload  lots,  the  time  within  which  consignors  or  persons 
ordering  cars  shall  load  the  same,  and  the  time  within  which 
consignees  or  persons  to  whom  freight  may  be  consigned  shall  unload 
and  discharge  the  same  and  receive  freight  from  die  freight  rooms, 
and  to  provide  penalties  to  be  paid  for  failure  on  the  part  of  the 
railroad  corporations,  consignors  and  consignees  to  conform  to  such 
rules.  Charges  for  demurrage  shall  be  uniform  so  that  the  same 
penalty  shall  be  paid  by  botfi  shipper  or  consignee  and  railroad 
corporation  for  an  equal  number  of  cars  for  each  day  for  which 
demurrage  is  charged. 

(b)  The  commission  shall  also  have  power  to  provide  the 
time  within  which  express  packages  shall  be  received,  gathered, 
transported  and  delivered  at  destination,  and  the  limits  within  which 
express  packages  shall  be  gathered  and  distributed  and  telegraph 
and  telephone  messages  delivered  without  extra  charge. 

Power  of  Commission  as  to  Service,  etc.,  of  Pubuc 

Utilities. 


Commission  to       Sec  46.     (a)     The  commission  shall  have  power,  after  hearing 

regulate  electric,   had  upon  its  own  motion  or  upon  complaint,  to  ascertain  and  fix 

gas  and  water  jy^j  ^jj  reasonable  standards,  classifications,  regulations,  practices, 

'^     ^^'   measurements   or   service   to   be   furnished,    imposed,   observed   and 

followed  by  all  electrical,  gas  and  water  corporations;    to  ascertain 

and  fix  adequate  and   serviceable  standards   for  the   measurement 

of    quantity,    quality,    pressure,    initial    voltage    or   other    condition 


pertaining  to  the  supply  of  the  product,  commodity  or  service 
furnished  or  rendered  by  any  such  public  utility;  to  prescribe 
reasonable  regulations  for  the  examination  and  testing  of  such 
product,  commodity  or  service  and  for  the  measurement  thereof; 
to  establish  reasonable  rules,  regulations,  specifications  and  standards 
to  secure  the  accuracy  of  all  meters  and  appliances  for  measurements; 
and  to  provide  for  the  examination  and  testing  of  any  and  all 
appliances  used  for  the  measurement  of  any  product,  commodity  or 
service  of  any  such  public  utility. 


To  regulate 
qualit\j. 


To  regulate 
measurements. 


Public  utility 
premises  shall 
be  open  to 
Commission, 


An\f  consumer 
may;  have 
meter  tested. 


Fee, 


(b)  The  commissioners  and  their  officers  and  employees  shall 
have  power  to  enter  upon  any  premises  occupied  by  any  public  utility, 
for  the  purpose  of  making  the  examinations  and  tests  and  exercising 
any  of  the  other  powers  provided  for  in  diis  act.  and  to  set  up  and 
use  on  such  premises  any  apparatus  and  appliances  necessary  therefor. 
The  agents  and  employees  of  said  public  utility  shall  have  the  right 
to  be  present  at  the  making  of  such  examinations  and  tests. 

(c)  Any  consumer  or  user  of  any  product,  commodity  or  service 
of  a  public  utility  may  have  any  appliance  used  in  the  measurement 
thereof  tested  upon  paying  the  fees  fixed  by  the  commission.  The 
commission  shall  establish  and  fix  reasonable  fees  to  be  paid  for  testing 
such  appliances  on  the  request  of  the  consumer  or  user,  the  fee  to 
be  paid  by  the  consumer  or  user  at  the  time  of  his  request,  but  to  be 
paid  by  the  public  utility  and  repaid  to  the  consumer  or  user  if  the 
appliance  is  found  defective  or  incorrect  to  the  disadvantage  of  the 
consumer  or  user,  under  such  rules  and  regulations  as  may  be 
prescribed  by  the  commission. 

Valuation  of  Property. 

Sec.  47.    The  commission  shall  have  power  to  ascertain  the  value    Commission  to 

of  the  property  of  every  public  utility  in  this  state  and  every  fact    ^^^^^f^^^ 

which  in  its  judgment  may  or  does  have  any  bearing  on  such  value.        f    r       t 
.    .  .  .  va/ufltion  of 

The  commission  shall  have  power  to  make  revaluations  from  time  to    proper tv. 

time  and  to  ascertain  all  new  construction,  extensions  and  additions    fo  make 

to  the  property  of  every  public  utility.  re-valuatioru. 


»*■ 


f 


M 


y 


hi 


) 


210 


LOUIS  SLOSS  &  CO. 


Uniform  System  of  Accounts:  Access  to  Accounts,  etc." 


Commission  to 

prescribe  sj^stem 

of  accounts  for 

public  utilities. 


To  prescribe 

forms  for 

other  records. 


Other  systems 
prohibited. 


Sec.  48.    The  commission  shall  have  power  to  establish  a  system 
of  accounts  to  be  kept  by  the  public  utilities  subject  to  its  jurisdiction, 
or  to  classify  said  public  utilities  and  to  establish  a  system  of  accounts 
for  each  class,  and  to  prescribe  the  manner  in  which  such  accounts 
shall  be  kept     It  may  also  in  its  discretion  prescribe  the  forms  of 
accounts,  records  and  memoranda  to  be  kept  by  such  public  utilities, 
including  the  accounts,  records  and  memoranda  of  the  movement  of 
traffic  as  well  as  the  receipts  and  expenditures  of  moneys,  and  any 
other  forms,  records  and  memoranda  which  in  the  judgment  of  the 
commission  may  be  necessary  to  carry  out  any  of  the  provisions  of 
this  act.     The  system  of  accounts  established  by  the  commission  and 
the  forms  of  accounts,  records  and  memoranda  prescribed  by  it  shall 
not  be  inconsistent,  in  the  case  of  corporations  subject  to  the  provisions 
of  the  act  of  congress  entitled  "An  act  to  regulate  commerce," 
approved  February  fourth,  eighteen  hundred  and  eighty-seven,  and 
the   acts  amendatory   thereof   and  supplementary   thereto,   with   the 
systems  and  forms  from  time  to  time  established  for  such  corporations 
by  the  interstate  commerce  commission,  but  nothing  herein  contained 
shall  affect  the  power  of  the  commission  to  prescribe  forms  of  accounts, 
records  and  memoranda  covering  information  in  addition  to   that 
required  by  the  interstate  commerce  commission.     The  commission 
may.   after  hearing  had  upon  its  own  motion  or  upon  complaint, 
prescribe  by  order  the  accounts  in  which  particular  outlays  and  receipts 
shall  be  entered,  charged  or  credited.     Where  the  commission  has 
prescribed  the  forms  of  accounts,  records  or  memoranda  to  be  kept 
by  any  public  utility  for  any  of  its  business,  it  shall  thereafter  be 
unlawful  for  such  public  utility  to  keep  any  accounts,  records  or 
memoranda  for  such  business  other  than  those  so  prescribed,  or  those 
prescribed  by  or  under  the  authority  of  any  other  state  or  of  the  United 
States,  excepting  such  accounts,  records  or  memoranda  as  shall  be 
explanatory  of  and  supplemental  to  the  accounts,  records  or  memoranda 
prescribed  by  the  commission. 


Power  of  Com- 
mission to  order 
carry^ing    of 
depreciation 
accounts. 


Depreciation  Accounts. 

Sec.  49.     The  commission  shall  have  power,  after  hearing,  to 
require  any  or  all  public  utilities  to  carry  a  proper  and  adequate 


PUBLIC  UTILITIES  ACT 


211 


depreciation  account  in  accordance  with  such  rules,  regulations  and 

forms  of  account  as  the  commission  may  prescribe.     The  commission 

may.  from  time  to  time,  ascertain  and  determine  and  by  order  fix 

the  proper  and  adequate  rates  of  depreciation  of  the  several  classes 

of  properly  of  each  public  utility.     Each  public  utility  shall  conform 

ito  depreciation  accounts  to  the  rates  so  ascertained,  determined  and 

fixed,  and  shall  set  aside  the  moneys  so  provided  for  out  of  earnings 

and  carry  the  same  in  a  depreciation  fund  and  expend  such  fund  To  prescribe 

only  for  such  purposes  and  under  such  rules  and  regulations,  both  as  to  '""^^^  f^^ 

original  expenditure  and  subsequent  replacement  as  the  commission  «^«"<^/'"^e  of 

may  prescribe.     The  income  from  investments  of  moneys  in  such  fund  j^nds^^^^^^ 

shall  likewise  be  carried  in  such  fund. 

New  Construction:    Franchises  and  Privileges. 

Sec.  50  (a)  No  street  railroad  corporation,  gas  corporation, 
electrical  corporation,  telephone  corporation  or  water  corporation  shall 
henceforth  begin  the  construction  of  a  street  railroad,  or  of  a  line, 
plant  or  system,  or  of  any  extension  of  such  street  railroad,  or  line, 
plant,  or  system,  without  having  first  obtained  from  the  commission  a 
certificate  that  the  present  or  future  public  convenience  and  necessity 
require  or  will  require  such  construction;  provided,  that  this  section 
shall  not  be  construed  to  require  any  such  corporation  to  secure  such 
certificate  for  an  extension  within  any  city  and  county  or  city  or  town 
within  which  it  shall  have  theretofore  lawfully  commenced  operations, 
or  for  an  extension  into  territory  either  within  or  without  a  city  and 
county  or  city  or  town,  contiguous  to  its  street  railroad,  or  line,  plant 
or  system,  and  not  theretofore  served  by  a  public  utility  of  like 
character,  or  for  an  extension  within  or  to  territory  already  served  by 
it,  necessary  in  the  ordinary  course  of  its  business;  and  provided, 
further,  that  if  any  public  utility,  in  constructing  or  extending  its  line, 
plant,  or  system,  shall  interfere  or  be  about  to  interfere  with  the 
operation  of  the  line,  plant  or  system  of  any  otfier  public  utility, 
already  constructed,  the  commission,  on  complaint  of  the  public  utility 
claiming  to  be  injuriously  affected,  may.  after  hearing,  make  such 
order  and  prescribe  such  terms  and  conditions  for  the  location  of  the 
lines,  plants  or  systems  affected  as  to  it  may  seem  just  and  reasonable. 


Certificate   of 
public  convenience 
and  necessit}f  to 
be  obtained 
before  beginning 
an}f  nerv 
construction, 
except.  . . 


Commission  to 
settle  disputes  as 
to  interference 
Hfith  existing 
plants. 


i 


/ 


t 


^^ 


'I 


1; 


til 


■•J 


i 


II 


212 


LOUIS  SLOSS  &  CO. 


Certificate  of 

public  convenience 

and  necasityf 

must  be  obtained 

before  exercising 

franchise    rights. 


Articles  of 

incorporation 

must  be  filed 

with 

Commission, 


Permit  of 

proper  public 

authorities  must 

be  had. 


Preliminary 

order  ma};  be 

secured. 


(h)    No  public  utility  of  a  class  specified  in  subsection  (a)  hereof 
shall  henceforth  exercise  any  right  or  privilege  under  any  franchise 
or   permit   hereafter    granted,    or   under    any    franchise   or   permit 
heretofore    granted,    but    not    heretofore    actually    exercised,    of 
the  exercise  of  which  has  been  suspended  for  more  than  one  year, 
without  first  having  obtained  from  the  commission  a  certificate  that 
public  convenience  and  necessity  require  the  exercise  of  such  right  or 
privilege;  provided,  that  when  the  commission  shall  find,  after  hearing, 
that  a  public  utility  has  heretofore  begun  actual  construction  work 
and  is  prosecuting  such  work,  in  good  faith,  uninterruptedly  and  with 
reasonable  diligence  in  proportion  to  the  magnitude  of  the  undertaking, 
under  any  franchise  or  permit  heretofore  granted  but  not  heretofore 
actually  exercised,  such  public  utility  may  proceed,  under  such  rulct 
and  regulations  as  the  commission  may  prescribe,  to  the  completion 
of  such  work,  and  may.  after  such  completion,  exercise  such  right  or 
privilege;  and  provided,  further,  that  this  section  shall  not  be  construed 
to  validate  any  rigjit  or  privilege  now  invalid  or  hereafter  becoming 
invalid  under  any  law  of  this  state. 

(c)      Before  any  certificate  may  issue,  under  this  section,  a  certified 
copy  of  its  articles  of  incorporation  or  charter,  if  the  applicant  be  a 
corporation,  shall  be  filed  in  the  office  of  the  commission.     Every 
applicant  for  a  certificate  shall  file  in  the  office  of  the  commission  such 
evidence  as  shall  be  required  by  the  commission  to  show  that  such 
applicant  has  received  the  required  consent,  franchise  or  permit  of  the 
proper  county,  city  and  county,  municipal  or  other  public  authority. 
The  commission  diall  have  power,  after  hearing,  to  issue  said  cer- 
tificate, as  prayed  for,  or  to  refuse  to  issue  the  same,  or  to  issue  it 
for  the  construction  of  a  portion  only  of  the  contemplated  ttrcct 
railroad,  line,  plant  or  system,  or  extension  thereof,  or  for  the  partial 
exercise   only  of  said  right  or  privilege,   and   may   attach   to   the 
exercise  of  the  rights  granted  by  said  certificate  such  terms   and 
conditions  as  in  its  judgment  the  public  convenience  and  necessity 
may   require.      If   a  public   utility   desires   to   exercise   a   right   or 
privilege  under  a  franchise  or  permit  which  it  contemplates  securing, 
but  which  has  not  as  yet  been  granted  to  it,  such  public  utility  may 
apply  to  the  commission  for  an  order  preliminary  to  the  issue  of  the 
certificate.     The  commission  may  thereupon  make  an  order  decUring 
that    it   will    thereafter,    upon    application,    under   such   rules   and 


PUBUC  UTILITIES  ACT 


213 


regulations  as  it  may  prescribe,  issue  the  desired  certificate,  upon 
such  terms  and  conditions  as  it  may  designate,  after  the  public  utility 
has  obtained  the  contemplated  franchise  or  permit.  Upon  the 
presentation  to  the  commission  of  evidence  satisfactory  to  it  that 
such  franchise  or  permit  has  been  secured  by  such  public  utility,  the 
commission  shall  thereupon  issue  such  certificate. 

Transfer  of  Property.  Franchises,  etc.;   Transfers  of 

Stock. 

Sec.  51  (a)  No  railroad  corporation,  street  railroad  corpora- 
tion, pipe  line  corporation,  gas  corporation,  electrical  corporation, 
telephone  corporation,  telegraph  corporation  or  water  corporation 
shall  henceforth  sell,  lease,  assign,  mortgage  or  otherwise  dispose  of 
or  encumber  the  whole  or  any  part  of  its  railroad,  street  railroad, 
line,  plant  or  system,  necessary  or  useful  in  the  performance  of  its 
duties  to  the  public,  or  any  franchise  or  permit  or  any  right  there- 
under, nor  by  any  means  whatsoever,  direct  or  indirect,  merge  or 
consolidate  its  railroad,  street  railroad,  line,  plant  or  system,  or 
franchises  or  permits  or  any  part  thereof,  with  any  other  public 
utility,  without  having  first  secured  from  the  commission  an  order 
authorizing  it  so  to  do.  Every  such  sale,  lease,  assignment,  mort- 
gage, disposition,  encumbrance,  merger  or  consolidation  made  other 
than  in  accordance  with  the  order  of  the  commission  authorizing  the 
same  shall  be  void.  The  permission  and  approval  of  the  conunission 
to  the  exercise  of  a  franchise  or  permit  under  section  fifty  of  this  act, 
or  the  sale,  lease,  assignment,  mortgage  or  other  disposition  or 
encumbrance  of  a  franchise  or  permit  under  this  section  shall  not  be 
construed  to  revive  or  validate  any  lapsed  or  invalid  franchise  or 
permit,  or  to  enlarge  or  add  to  the  powers  or  privileges  contained  in 
the  grant  of  any  franchise  or  permit,  or  to  waive  any  forfeiture. 
Nothing  in  this  subsection  contained  shall  be  construed  to  prevent 
the  sale,  lease  or  other  disposition  by  any  public  utility  of  a  class 
designated  in  this  subsection  of  property  which  is  not  necessary  or 
useful  in  the  performance  of  its  duties  to  the  public,  and  any  sale 
of  its  property  by  such  public  utility  shall  be  conclusively  presumed 
to  have  been  of  property  which  is  not  useful  or  necessary  in  the 
performance  of  its  duties  to  the  public,  as  to  any  purchaser  of  such 
property  m  good  faith  for  value. 


Public  utilities 
map  not  dispose 
of  certain 
property;,  merge 
or  consolidate 
without 
permission  of 
Commission. 


Sales  without 
order  of 
Commission 
are  void. 


Property; 
which  may; 
be  sold  without 
permission    of 
Commission. 


t 


214 


LOUIS  SLOSS  &  CO. 


PUBLIC  UTILITIES  ACT 


215 


1'. 


wl 


')'' 


4\ ' 


No  public 

utilityf  ma}) 

acquire  stock  of 

oihcrs  without 

permission. 

Transfers  in 

violation  are 

void. 


Issuance  of 

securities  b}f 

public  utilities 

a  special 

privilege. 


Control  vested 
in  the  State. 


Conditions  under 

Iphich  public 

utilities  may 

issue  stocks 

and  bonds. 


L< 


(h)  No  public  utility  shall  hereafter  purchase  or  acquire,  take 
or  hold,  any  part  of  the  capital  stock  of  any  other  public  utility, 
organized  or  existing  under  or  by  virtue  of  the  laws  of  this  state, 
without  having  been  first  authorized  to  do  so  by  the  commission. 
Every  assignment,  transfer,  contract  or  agreement  for  assignment  or 
transfer  of  any  stock  by  or  through  any  person  or  corporation  to  any 
corporation  or  otherwise  b  violation  of  any  of  the  provisions  of  this 
section  shall  be  void  and  of  no  effect,  and  no  such  transfer  shall 
be  made  on  the  books  of  any  public  utility.  Nothing  herein  con- 
tained shall  be  construed  to  prevent  the  holding  of  stock  heretofore 
lawfully  acquired. 

Approval  of  Stocks  and  Stock  Certificates,  and  Bonds, 
Notes  and  Other  Evidences  of  Indebtedness. 

Sec.  52  (a)  The  power  of  public  utilities  to  issue 
stocks  and  stock  certificates,  and  bonds,  notes  and  other 
evidences  of  indebtedness  and  to  create  liens  on  their  prop- 
erty situated  within  this  state  is  a  special  privilege,  the 
right  of  supervision,  regulation,  restriction  and  control  of 
which  is  and  shall  continue  to  be  vested  in  the  state,  and 
such  power  shall  be  exercised  as  provided  by  law  and 
under  such  rules  and  regulations  as  the  commission  may 
prescribe. 

(h)  A  public  utility  may  issue  stocks  and  stock  certifi- 
cates, and  bonds,  notes  and  other  evidences  of  indebtedness 
payable  at  periods  of  more  than  twelve  months  after  the 
date  thereof,  for  the  following  purposes  and  no  others, 
namely,  for  the  acquisition  of  property,  or  for  the  con- 
struction, completion,  extension  or  improvement  of  its 
facilities,  or  for  the  improvement  or  maintenance  of  its 
service,  or  for  the  discharge  or  lawful  refunding  of  its 
obligations,  or  for  the  reimbursement  of  moneys  actually 
expended  from  income  or  from  any  other  moneys  in  the 
treasury  of  the  public  utility  not  secured  by  or  obtained 
from  the  issue  of  stocks  or  stock  certificates,  or  bonds, 
notes  or  other  evidences  of  indebtedness  of  such  public 
utility,  within  five  years  next  prior  to  the  filing  of  an 


Issue  must  be 
authorized  b}f 
Commission, 


application  with  the  commission  for  the  required  author- 
ization, for  any  of  the  aforesaid  purposes  except  main- 
tenance of  service  and  replacements,  in  cases  where  the 
applicant  shall  have  kept  its  accounts  and  vouchers  for 
such  expenditures  in  such  manner  as  to  enable  the  com- 
mission to  ascertain  the  amount  of  moneys  so  expended 
and  the  purposes  for  which  such  expenditure  was  made; 
provided,  that  such  public  utility,  in  addition  to  the  other 
requirements  of  law,  shall  first  have  secured  from  the 
commission  an  order  authorizing  such  issue  and  stating 
the  amount  thereof  and  the  purpose  or  purposes  to  which 
the  issue  or  the  proceeds  thereof  are  to  be  applied,  and 
that,  in  the  opinion  of  the  commission,  the  money,  property 
or  labor  to  be  procured  or  paid  for  by  such  issue  is 
reasonably  required  for  the  purpose  or  purposes  specified 
in  the  order,  and  that,  except  as  otherwise  permitted  in  the 
order  in  the  case  of  bonds,  notes  or  other  evidences  of 
indebtedness,  such  purpose  or  purposes  are  not,  in  whole 
or  in  part,  reasonably  chargeable  to  operating  expenses  or 
to  income.  To  enable  it  to  determine  whether  it  will  issue 
such  order,  the  commission  shall  hold  a  hearing  and  may 
make  such  additional  inquiry  or  investigation,  and  examine 
such  witnesses,  books,  papers,  documents  and  contracts 
and  require  the  filing  of  such  data  as  it  may  deem  of 
assistance.  The  commission  may  by  its  order  grant  per- 
mission for  the  issue  of  such  stocks  or  stock  certificates, 
or  bonds,  notes  or  other  evidences  of  indebtedness  in  the 
amount  applied  for,  or  in  a  lesser  amount,  or  not  at  all, 
and  may  attach  to  the  exercise  of  its  permission  such 
condition  or  conditions  as  it  may  deem  reasonable  and 
necessary.  The  commission  may  authorize  issues  of  bonds, 
notes  or  other  evidences  of  indebtedness,  less  than,  equiv- 
alent to  or  greater  than  the  authorized  or  subscribed  capital 
stock  of  a  public  utility  corporation,  and  the  provisions  of 
sections  309  and  456  of  the  Civil  Code  of  this  state,  in  so 
far  as  they  contain  inhibitions  against  the  creation  by 
corporations  of  indebtedness,  evidenced  by  bonds,  notes  or 
otherwise,  in  excess  of  their  total  authorized  or  subscribed 


Investigations 
bjf  Commission. 


Public  utilities 
exempt  from 
provisions  of 
sections  309 
and  456  of  the 
civil  code 
limiting 
indebtedness. 


f 


( 


I 


216 


LOUIS  SLOSS  &  CO. 


Proceeds  from 

sale  of  securities 

shall  he  expended 

as  ordered  b\f 

the  Commission. 


Right  to  he 

corporation  and 

franchise    not 

to  he  capitalized 

except.  . . 


Contracts  for 

consolidation 

ma}f  not  he 

capitalized. 

Public  utilityj 

must  account 

for  the  proceeds 

of  securities 

sold. 

\ 


capital   stock   shall  have   no  application  to  public   utility 
corporations.    No  public  utility  shall,  without  the  consent 
of  the  commission,  apply  the  issue  of  any  stock  or  stock 
certificate,  or  bond,  note  or  other  evidence  of  indebtedness, 
or  any  part  thereof,  or  any  proceeds  thereof,  to  any  purpose 
not  specified  in  the  commission's  order,  or  to  any  purpose 
specified  in  the  commission's  order  in  excess  of  the  amount 
authorized  for  such  purpose,  or  issue  or  dispose  of  the 
same  on  any  terms  less  favorable  than  those  specified  in 
such  order,  or  a  modification  thereof.     A  public  utility 
may  issue  notes,  for  proper  piuposes  and  not  in  violation 
of  any  provision  of  this  act  or  any  other  act,  payable  at 
periods  of  not  more  than  twelve  months  after  the  date  of 
issuance  of  the  same,  without  the  consent  of  the  commis- 
sion, but  no  such  note  shall,   in  whole   or  in  part,  be 
refunded  by  any  issue  of  stocks  or  stock  certificates,  or  of 
bonds,  notes  of  any  term  or  character  or  any  other  evidence 
of  indebtedness,  without  the  consent  of  the  commission. 
The   conunission  shall  have  no  power  to  authorize   the 
capitalization   of    the    right    to   be    a   corporation,    or   to 
authorize   the    capitalization  of   any   franchise    or   permit 
whatsoever  or  the  right  to  own,  operate  or  enjoy  any  such 
franchise  or  permit,  in  excess  of  the  amount  (exclusive  of 
any  tax  or  annual  charge)  actually  paid  to  the  state  or  to 
a  political  subdivision  thereof  as  the  consideration  for  the 
grant  of  such  franchise,  permit  or  right;  nor  shall  any 
contract  for  consolidation  or  lease  be  capitalized,  nor  shall 
any  public  utility  hereafter  issue  any  bonds,  notes  or  other 
evidences  of  indebtedness  against  or  as  a  lien  upon  any 
contract  for  consolidation  or  merger. 

(c)  The  commission  shall  have  the  power  to  require 
public  utilities  to  account  for  the  disposition  of  the  pro- 
ceeds of  all  sales  of  stocks  and  stock  certificates,  and 
bonds,  notes  and  other  evidences  of  indebtedness,  in  such 
form  and  detail  as  it  may  deem  advisable,  and  to  establish 
such  rules  and  regulations  as  it  may  deem  reasonable  and 
necessary  to  insure  the  disposition  of  such  proceeds  for  the 
purpose  or  purposes  specified  in  its  order. 


PUBUC  UTILITIES  ACT 


217 


Protection 
hona  fide 
purchasers. 


(d)  All  stock  and  every  stock  certificate,  and  every  Stock  orhonds 
bond,  note  or  other  evidence  of  indebtedness,  of  a  pubUc  '"^^^  ^/^"""^ 
utility,  issued  without  an  order  of  the  commission  author-  Qq^j^i^Iqj^ 
izing  the  same  then  in  effect  shall  be  void,  and  likewise  all  ^re  void, 
stock  and  every  stock  certificate,  and  every  bond,  note  or 
other  evidence  of  indebtedness,  of  a  public  utility,  issued 
with  the  authorization  of  the  commission,  but  not  conform- 
ing in  its  provisions  to  the  provisions,  if  any,  which  it  is 
required  by  the  order  of  authorization  of  the  commission 
to  contain,  shall  be  void;  but  no  failure  in  any  other 
respect  to  comply  with  the  terms  or  conditions  of  the  order  Protection  to 
of  authorization  of  the  commission  shall  render  void  any 
stock  or  stock  certificate,  or  any  bond,  note  or  other 
evidence  of  indebtedness,  except  as  to  a  corporation  or 
person  taking  the  same  otherwise  than  in  good  faith  and 
for  value  and  without  actual  notice. 

(c)     Every  public  utility  which,  directly  or  indirectly,  Penalt}ffor 

issues  or  causes  to  be  issued,  any  stock  or  stock  certificate,  '"'«"*«  0/ 

or  bond,  note,  or  other  evidence  of  indebtedness,  in  non-  ^^^^^^  *  '''^T^. 

sate  of  securities, 
conformity  with  the  order  of  the  commission  authorizing 

the  same,  or  contrary  to  the  provisions  of  this  act,  or  of 
the  constitution  of  this  state,  or  which  applies  the  proceeds 
from  the  sale  thereof,  or  any  part  thereof,  to  any  purpose 
other  than  the  purpose  or  purposes  specified  in  the  com- 
mission's order,  as  herein  provided,  or  to  any  purpose 
specified  in  the  commission's  order  in  excess  of  the  amount 
in  said  order  authorized  for  such  purpose,  is  subject  to  a 
penalty  of  not  less  than  five  hundred  dollars  nor  more  than 
twenty  thousand  dollars  for  each  ofiFense. 

(/)    Every  officer,  agent  or  employee  of  a  public  utility  Penalt-^  for 
and  every  other  person  who  knowingly  authorizes,  directs,  fraudulent  issue 
aids   in,   issues   or  executes,   or   causes   to   be   issued   or  of  secun/ies. 
executed,  any  stock  or  stock  certificate,  or  bond,  note  or 
other  evidence  of  indebtedness,  in  non-conformity  with  the 
order  of  the  commission  authorizing  the  same,  or  contrary 
to  the  provisions  of  this  act,  or  of  the  constitution  of  this 
state,  or  who,  in  any  proceeding  before  the  commission. 


V 


218 


LOUIS  SLOSS  &  CO. 


knowingly  makes  any  false  statement  or  representation  or 
with  knowledge  of  its  falsity  files  or  causes  to  be  filed  with 
the  commission  any  false  statement  or  representation, 
which  said  statement  or  representation  so  made,  filed  or 
caused  to  be  filed  may  tend  in  any  way  to  influence  the 
commission  to  make  an  order  authorizing  the  issue  of  any 
stock  or  stock  certificate,  or  any  bond,  note  or  other 
evidence  of  indebtedness,  or  which  results  in  procuring 
from  the  commission  the  making  of  any  such  order,  or 
who,  with  knowledge  that  any  false  statement  or  repre- 
sentation was  made  to  the  commission,  in  any  proceeding, 
tending  in  any  way  to  influence  the  commission  to  make 
such  order,  issues  or  executes  or  negotiates,  or  causes  to  be 
issued,  executed  or  negotiated  any  such  stock  or  stock 
certificate,  or  bond,  note  or  other  evidence  of  indebted- 
ness, or  who,  directly  or  indirectly,  knowingly  applies,  or 
causes  or  assists  to  be  applied  the  proceeds  or  any  part 
thereof,  from  the  sale  of  any  stock  or  stock  certificate,  or 
bond,  note  or  other  evidence  of  indebtedness,  to  any 
purpose  not  specified  in  the  conmiission's  order,  or  to  any 
purpose  specified  in  the  commission's  order  in  excess  of 
the  amount  authorized  for  such  purpose,  or  who,  with 
knowledge  that  any  stock  or  stock  certificate,  or  bond,  note 
or  other  evidence  of  indebtedness,  has  been  issued  or 
executed  in  violation  of  any  of  the  provisions  of  this  act, 
negotiates,  or  causes  the  same  to  be  negotiated,  shall  be 
guilty  of  a  felony. 

Approval  of       (s)     No  provision  of  this  act,  and  no  deed  or  act  done 
securities  b\f  or  performed  under  or  in  connection  therewith,  shall  be 
Commission  held  or  construed  to  obligate  the  State  of  California  to  pay 
no  guarantee,  ^j.  guarantee,   in  any  manner  whatsoever,  any  stock  or 
stock  certificate,  or  bond,  note  or  other  evidence  of  indebt- 
edness, authorized,  issued  or  executed  under  the  provisions 
of  this  act. 

(h)  All  stocks  and  stock  certificates,  and  bonds,  notes 
and  other  evidences  of  indebtedness  issued  by  any  public 
utility  after  this  act  takes  effect,  upon  the  authority  of  any 


PUBUC  UTILITIES  ACT 


219 


articles  of  incorporation  or  amendments  thereto  or  vote  of 
the  stockholders  or  directors  filed,  taken  or  had,  or  other 
proceedings  taken  or  had,  previous  to  the  taking  effect  of 
this  act,  shall  be  void,  unless  an  order  of  the  commission 
authorizing  the  issue  of  such  stocks  or  stock  certificates, 
or  bonds,  notes  or  other  evidences  of  indebtedness  shall 
have  been  obtained  from  the  commission  prior  to  such 
issue.  The  commission  may  by  its  order  impose  such 
condition  or  conditions  as  it  may  deem  reasonable  and 
necessary. 

ARTICLE  IV. 

PROCEDURE  BEFORE  RAILROAD  COMMISSION 

AND  COURTS. 

Rules  for  Hearings:   Informalities. 

Sec.  53.  All  hearings  and  investigations  before  the  commission 
or  any  commissioner  shall  be  governed  by  this  act  and  by  rules  of 
practice  and  procedure  to  be  adopted  by  the  commission,  and  in 
the  conduct  thereof  neither  the  commission  nor  any  commissioner 
shall  be  bound  by  the  technical  rules  of  evidence.  No  informality 
in  any  proceeding  or  m  the  manner  of  taking  testimony  before  the 
commission  or  any  commissioner  shall  mvalidate  any  order,  decision, 
rule  or  regulation  made,  approved  or  confirmed  by  the  commission. 

Powers  of  Commission  as  to  Process:   Service. 


Authority^  of 
articles  of 
incorporation^ 
vote  of 
stockholders 
or  directors 
previous  to 
taking  effect  of 
this  act  not 
sufficient  for 
issuing  securities 
rvithout  order  of 
the  Commission. 


This  act  and 
**Rules  of 
Practice**  to 
govern  hearings. 

Commission 
not  hound  hyf 
rules  of 
technical 
evidence. 


Sec.   54.     The  commission  and  each  commissioner  shall  have  Commission  has 
power  to  issue  writs  of  summons,  subpoenas,  warrants  of  attachment,   certain  ponders 

warrants  of  commitment  and  all  necessary  process  in  proceedings  for  ^*,  ^°"j 
^    .      .      ,.,  ,         ,  '^  **       ,  of  record. 

contempt,  m  the  like  manner  and  to  the  same  extent  as  courts  of  jy/^^  l^^Jg 

record.  The  process  issued  by  the  commission,  or  any  commissioner,  subpoenas,  etc. 
shall  extend  to  all  parts  of  the  state  and  may  be  served  by  any 
person  authorized  to  serve  process  of  courts  of  record,  or  by  any 
person  designated  for  that  purpose  by  the  ocnmiission  or  a  commis- 
sioner. The  person  executing  any  such  process  shall  receive  such 
compensation  as  may  be  allowed  by  the  commission,  not  to  exceed 


i\ 


220 


LOUIS  SLOSS  &  CO. 


PUBLIC  UTILITIES  ACT 


2£l 


^i 


\¥ 


Fees  of 
witnesses. 


the  fees  now  prescribed  by  law  for  similar  services,  and  such  fees 
shall  be  paid  in  the  same  manner  as  provided  herein  for  payment  of 
the   fees  of  witnesses. 

Witnesses;   Attendance  and  Fees:    Depositions: 

Incrimination. 

Commission  to  Sec.  55.  (a)  The  commission  and  each  commissioner  shall 
"  tet"iwJ^^^  !'*''*  ^"^^^  ^  administer  oaths,  certify  to  all  official  acte.  and  to 
etc  '**"*  subpoenas  for  the  attendance  of  witnesses  and  the  production 
of  papers,  waybills,  books,  accounts,  documents  and  testimony  in 
any  inquiry,  investigation,  hearing  or  proceeding  in  any  part  of  the 
state.  Each  witness  who  shall  appear,  by  order  of  the  commission 
or  a  commissioner,  shall  receive  for  his  attendance  the  same  fees 
and  mileage  allowed  by  law  to  a  witnett  in  civil  cases,  which 
amount  shall  be  paid  by  the  parly  at  whose  request  such  witness 
is  subpoenaed.  When  any  witness  who  has  not  been  required  to 
attend  at  the  request  of  any  party  shall  be  subpoenaed  by  the 
commission,  his  fees  and  mileage  shall  be  paid  from  the  funds 
appropriated  for  the  use  of  the  commission  in  the  same  manner  at 
other  expenses  of  the  commission  are  paid.  Any  witness  subpoenaed 
except  one  whose  fees  and  mileage  may  be  paid  from  the  funds  of 
the  conunission,  may.  at  the  time  of  service,  demand  the  fee  to 
which  he  is  entitled  for  travel  to  and  from  the  place  at  which  he 
is  required  to  appear,  and  one  day's  attendance.  If  such  witness 
demands  such  fees  at  the  time  of  service,  and  they  are  not  at  that 
time  paid  or  tendered,  he  shall  not  be  required  to  attend  before  the 
commission  or  commissioner,  as  directed  in  the  subpoena.  All  fees 
or  mileage  to  which  any  witness  is  entitled  under  the  provisions  of 
this  section  may  be  collected  by  action  therefor  instituted  by  the 
person  to  whom  such  fees  are  payable.  No  witness  furnished  with 
free  transportation  shall  receive  mileage  for  the  distance  he  may  have 
traveled  on  such  free  transportation. 

Proceedings  for         (b)      The  superior  court  in   and   for  the  county,   or  city  and 

contempt,  m    county,   in  which  any  inquiry,  investigation,  hearing  or  proceeding 

may  be  held  by  the  commission  or  any  commissioner  shall  have  the 

power  to  compel  the  attendance  of  witnesses,  the  giving  of  testimony 

and  the  production  of  papers,  including  waybills,  books,   accounts 


and  documents,  as  required  by  any  subpoena  issued  by  the  commis- 
sion or  any  commissioner.      The  conunission  or  the   conunissioner 
before  whom  the  testimony  is  to  be  given  or  produced,  in  case  of 
the  refusal  of  any  witness  to  attend  or  testify  or  produce  any  papers 
required  by  such  subpoena,  may  report  to  the  superior  court  in  and 
for  the  county,   or  city   and  county,   in  which   the   proceeding   is 
pending,  by  petition,   setting  forth  that  due  notice  has  been  given 
of   the    time    and    place   of    attendance    of    said    witness,    or    the 
production  of  said  papers,  and  that  the  witness  has  been  summoned 
in  the  manner  prescribed  in  this  act,  and  diat  the  witness  has  failed 
and    refused   to    attend   or   produce    the   papers   required   by    the 
subpoena,  before  the  commission  or  commissioner,   in  the  cause  or 
proceeding  named  in  the  notice  and  subpoena,   or  has  refused  to 
answer  questions  propounded  to  him  in  the  course  of  isuch  proceeding, 
and  ask  an  order  of  said  court,  compelling  the  witness  to  attend  and 
testify  or  produce  said  papers  before  the  conunission.     The  court, 
upon  the  petition  of  the  commission  or  such  commissioner,  shall  enter 
an  order  directing  the  witness  to  appear  before  the  court  at  a  time 
and  place  to  be  fixed  by  the  court  in  such  order,  the  time  to  be 
not  more  than  ten  days  from  the  date  of  the  order,  and  then  and 
there  show  cause  why  he  has  not  attended  and  testified  or  produced 
said  papers  before  the  commission.     A  copy  of  said  order  shall  be 
served  upon  said  witness.     If  it  shall  appear  to  the  court  that  said 
subpoena  was  regularly  issued  by  the  commission  or  a  conunissioner, 
the  court  shall  thereupon  enter  an  order  that  said  witness  appear 
before  the  commission  or  said  commissioner  at  the  time  and  place 
fixed  in  said  order,  and  testify  or  produce  the  required  papers,  and 
upon  failure  to  obey  said  order,  said  witness  shall  be  dealt  with  as 
for  contempt  of  court.     The  remedy  provided  in  this  subsection  is 
cumulative,  and  shall  not  be  construed  to  impair  or  interfere  with 
the  power  of  the   commission   or   a   commissioner  to   enforce   the 
attendance  of  witnesses  and  the  production  of  papers,  and  to  punish 
for  contempt  in  the  same  manner  and  to  die  same  extent  as  cQurts 
of  record. 

(c)  The  commission  or  any  commissioner  or  any  party  may,  in    Commission 
any    investigation    or    hearing    before    the    commission,    cause    the    jj^ay^  take 
deposition  of  witnesses  residing  withm  or   without  the  state  to  be    depositions. 


t 


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in 


LOUIS  SLOSS  &  CO. 


taken  in  the  manner  prescribed  by  law  for  like  depositions  in  civil 
actions  in  the  superior  courts  of  this  state  and  to  that  end  may 
compel  the  attendance  of  witnesses  and  the  production  of  books, 
waybills,  documents,  papers  and  accounts. 

Possible        (d)       No    person    shall    be    excused    from    testifying    or    from 

incrimination  producing  any  book,  waybill,  document,  paper  or  account  m  any 

no  excuse  for  investigation  or  inquiry  by  or  hearing  before  the  commission  or  any 

^^^"ati1^°  commissioner,  when  ordered  to  do  so,  upon  the  ground  that  the 

"         testimony  or  evidence,  book,  waybill,  document,  paper  or  account 

required  of   him  may   tend  to  incriminate  him  or   subject  him   to 

penalty  or  forfeiture,  but  no  person  shall  be  prosecuted,  punished 

or  subjected  to  any  penalty  or  forfeiture  for  or  on  account  of  any 

act,  transaction,  matter  or  thing  concerning  which  he  shall,  under 

oath  have   testified   or  produced  documentary  evidence;   provided, 

that  no  person  so  testifying  shall  be  exempt  from  prosecution  or 

punishment  for   any  perjury   committed  by  him   in  his   testimony. 

Nothing  herein  contained  shall  be  construed  as  in  any  manner  giving 

to  any  public  utility  immunity  of  any  kind. 

Certified  Copies  of  Papers  Filed  to  Be  Evidence. 

Certified  copies       Sec.  56.      (a)      Copies  of  all  official  documents  and  orders  filed 

of  records  or   deposited   according   to   law   in   the   office   of   the   commission, 

accepted  as  certified  by  a  commissioner  or  by  the  secretary  under  the  official 

evidence,   ^^j  ^^  ^j^^  commission  to  be  true  copies  of  the  originals,  shall  be 

evidence  in  like  manner  as  the  originals. 

Certified  copies        (h)     Every  order.  auAorization  or  certificate  issued  or  approved 

of  certain  records  \yy  (^^  commission  under  any  provision  of  sections  38,  39,  40,  41, 

orders,  etc.,  may   ^3^  ^q^  3^   ^^^  52  ^f  this  act  shall  be  in  writing  and  entered  on 

be  recorded.  ^^  j^^^j^^  of  the  commission.     Any  such  order,  authorization  or 

certificate,  or  a  copy  thereof,  or  a  copy  of  the  record  of  any  such 

order,  authorization  or  certificate,  certified  by  a  commissioner  or  by 

the  secretary  under  the  official  seal  of  the  commission  to  be  a  true 

copy  of  the  original  order,  authorization,  certificate  or  entry,  may  be 

recorded  in  the  office  of  the  recorder  of  any  county,  or  city  and 

4  county,  in  which  is  located  the  principal  place  of  business  of  any 

public  utility  affected  thereby,  or  in  which  is  situated  any  property 


PUBUC  UTILITIES  ACT 


225 


of  any  such  public  utility,  and  such  record  shall  impart  notice  of 
its  provisions  to  all  persons.  A  certificate  under  the  seal  of  the 
commission  that  any  such  order,  authorization  or  certificate  has 
not  been  modified,  stayed,  suspended  or  revoked  may  also  be 
recorded  in  the  same  offices  in  the  same  manner  and  with  like  effect 

Fees. 

Sec.  57.     The  commission  shall  charge  and  collect  the  following 
fees:    for  copies  of  papers  and  records  not  required  to  be  certified 
or  otherwise  authenticated  by  the  commission,  ten  cents  for  each 
folio;    for  certified  copies  of  official  documents  and  orders  filed  in 
its  office,    fifteen   cents   for  each   folio   and   one   dollar   for  every 
certificate  under  seal  affixed  thereto;    for  certifymg  a  copy  of  any 
report  made  by  a  public  utility,  two  dollars;  for  each  certified  copy 
of  the  aimual  report  of  the  conunission,  one  dollar  and  fifty  cents; 
for  certified  copies  of  evidence  and  proceedings  before  the  commis- 
sion, fifteen  cents  for  each  folio;  for  certificate  authorizing  an  issue 
of  bonds,  notes  or  other  evidences  of  indebtedness,  one  dollar  for 
each  thousand  dollars  of  the  face  value  of  the  authorized  issue  or 
fraction  thereof  up  to  one  million  dollars,  and  fifty  cents  for  each 
one  thousand  dollars  over  one  million  dollars  and  up  to  ten  million 
dollars,  and  twenty-five  cents  for  each  one  thousand  dollars  over 
ten  million  dollars,  with  a  minimum  fee  in  any  case  of  two  hundred 
and  fifty  dollars;  provided,  that  no  fee  shall  be  required  when  such 
issue  is  made  for  the  purpose  of  guaranteeing,  taking  over,  refunding, 
discharging  or  retiring  any  bond,  note  or  other  evidence  of  indebted- 
ness up  to  the  amount  of  the  issue  guaranteed,  taken  over,  refunded, 
discharged  or  retired.     No  fees  shall  be  charged  or  collected  for 
copies  of  papers,  records  or  official  documents,  furnished  to  public 
officers  for  use  in  their  official  capacity,  or  for  the  annual  reports 
of  the  commission  m  the  ordinary  course  of  distribution,  but  the 
commission  may  fix  reasonable  charges  for  publications  issued  under 
its  authority.     All  fees  charged  and  collected  under  this  section  shall 
be  paid,    at   least   once   each   week,    accompanied   by   a   detailed 
statement  thereof,  into  the  treasury  of  the  state  to  the  credit  of  a 
fund  to  be  known  as  the  **Railroad  Commission  Fund,**  which  fund 
is  hereby  created. 


Fees  for  papen^ 
records, 
official 
documents, 
reports  of  public 
utilities  and 
reports  of 
Commission. 


Fees  on  stock 
or  bond  issues. 


All  fees  paid 
into  State 
Treasury  to 
credit  of 
*' Railroad 
Commission 
Fund.** 


M, 


kit 


t 


224 


LOUIS  SLOSS  &  CO. 


PUBLIC  UTILITIES  ACT 


225 


U 


H'm 


Tj. .       .      I 


r" 


'^ 


utilities. 


Inspection  of  Books,  Papers  and  Documents. 

Commission  to  Sec.  58.  The  commission,  each  commissioner  and  each  officer 
have  free  access  and  person  employed  by  the  commission  shall  have  the  right,  at  any 
to  all  records  j^jjj  j^jj  tjmgj^  ^^y  inspect  the  accounts,  books,  papers  and  documents 
^Lfu^h^  of  any  public  utility,  and  the  conunission,  each  commissioner  and 
any  officer  of  the  commission  or  any  employee  authorized  to 
administer  oaths  shall  have  power  to  examine  under  oath  any  officer, 
agent  or  employee  of  such  public  utility  in  relation  to  the  business 
and  affairs  of  said  public  utility;  provided,  that  any  person  other 
than  a  commissioner  or  an  officer  of  the  commission  demanding  such 
inspection  shall  produce  under  the  hand  and  seal  of  the  commission 
his  authority  to  make  such  inspection;  and  provided  further,  that  a 
written  record  of  the  testimony  or  statement  so  given  under  oath 
shall  be  made  and  filed  with  the  commission. 

Production  of  Books  and  Records  Kept  Outside  the 

State. 

Commission      Sec.  59.     The  commission  may  require,  by  order  served  on  any 

map  require  public  utility  in  the  manner  provided  herein  for  the  service  of  orders.* 

records  kept  out  ^^  production  within  this  state  at  such  time  and  place  as  it  may 

of  State  to  he  jg,ignate.  of  any  books,  accounts,  papers  or  records  kept  by  said 

produced.  ^^^.^  ^^.^   .^  ^^  ^^^  ^^  ^j^^^  without  this  sUte.  or,   at  its 

option,  verified  copies  in  lieu  thereof,  so  that  an  cxaminatioo  thereof 
may  be  made  by  the  commission  or  under  its  direction. 


Filing  of  com- 
plaints  against 
public    utilities. 


Method  of 

handling    bjf 

Commission. 


Complaints. 

Sec.  60.  Complaint  may  be  made  by  the  commission  of  iu  own 
motion  or  by  any  corporation  or  person,  chamber  of  commerce,  board 
of  trade,  or  any  civic,  commercial,  mercantile,  traffic,  agricultural 
or  manufacturing  association  or  organization  or  any  body  politic  or 
municipal  corporation,  by  petition  or  complaint  in  writing,  setting 
forth  any  act  or  thing  done  or  omitted  to  be  done  by  any  public 
utility  including  any  rule,  regulation  or  charge  heretofore  established 
or  fixed  by  or  for  any  public  utility,  in  violation,  or  claimed  to  be 
in  violation,  of  any  provision  of  law  or  of  any  order  or  rule  of  the 
commission;  provided,  that  no  complaint  shall  be  entertained  by  the 


commission,  except  upon  its  own  motion,  as  to  the  reasonableness 
of  any  rates  or  charges  of  any  gas.  electrical,  water  or  telephone 
corporation,  unless  the  same  be  signed  by  the  mayor  or  the  president 
or  chairman  of  the  board  of  trustees  or  a  majority  of  the  council, 
commission,  or  other  legislative  body  of  the  city  and  county,  or  city 
or  town,  if  any.  within  which  the  alleged  violation  occurred,  or  not 
less  than  twenty-five  consumers  or  purchasers  or  prospective  con- 
sumers or  purchasers,  of  such  gas,  electricity,  water  or  telephone 
service.  All  matters  upon  which  complaint  may  be  founded  may 
be  joined  in  one  hearing,  and  no  motion  shall  be  entertained  against 
a  complaint  for  misjoinder  of  causes  of  action  or  grievances  or 
misjoinder  or  nonjoinder  of  parties;  and  in  any  review  by  the  courts 
of  orders  or  decisions  of  the  commission  the  same  rule  shall  apply 
with  regard  to  the  joinder  of  causes  and  parties  as  herein  provided. 
Hie  commission  shall  not  be  required  to  dismiss  any  complaint 
because  of  the  absence  of  direct  damage  to  the  complainant  Upon  Cop}}  of 
the  filing  of  a  complaint,  the  commission  shall  cause  a  copy  thereof  complaint 
to  be  served  upon  the  corporation  or  person  complained  of.  Service  served  on 
in  all  hearings,  investigations  and  proceedings  pending  before  the  ^  ^^^  offender, 
commission  may  be  made  upon  any  person  upon  whom  a  summons 
may  be  served  in  accordance  with  the  provisions  of  the  Code  of 
Civil  Procedure  of  this  state,  and  may  be  made  personally  or  by 
mailmg  in  a  sealed  envelope,  registered,  with  postage  prepaid.  The 
commission  shall  fix  the  time  when  and  place  where  a  hearing  will 
be  had  upon  the  complaint  and  shall  serve  notice  thereof,  not  less 
than  ten  days  before  the  time  set  for  such  hearing,  unless  the 
commission  shall  find  that  public  necessity  requires  that  such  hearing 
be  held  at  an  earlier  date. 

Hearings,  Orders  and  Record:    Recovery  on  Decision. 

Sec.   61.      (a)     At  the  time  fixed  for  any  hearing  before  the   Defendant 
commission  or  a  commissioner,  or  the  time  to  which  the  same  may   ^""\^"  ^^ 
have  been  continued,  the  complainant  and  the  corporation  or  person 
complained  of,  and  such  corporations  or  persons  as  the  commission 
may  allow  to  intervene,  shall  be  entitled  to  be  heard  and  to  introduce 
evidence.      The    commission    shall    issue    process    to    enforce    the    Witnesses  ma}f 
attendance  of  all  necessary  witnesses.     After  the  conclusion  of  the   he  subpoenaed. 


226 


LOUIS  SLOSS  fie  CO. 


Decisions  filed 

and  cop})  sent  to 

defendant. 

Order  ejBfective 
in  twent})  da^s. 


hearing,  the  commission  shall  make  and  file  its  order,  containing  its 
decision.     A  copy  of  such  order,  certified  under  the  seal  of  the 
commission,   shall  be  served  upon  the  corporation  or  person  com- 
plained of,  or  his  or  its  attorney.     Said  order  shall,   of  its  own 
force,  take  effect  and  become  operative  twenty  days  after  the  service 
thereof,  except  as  otherwise  provided,  and  shall  continue  in  force 
either  for  a  period  which  may  be  designated  therein  or  until  changed 
or  abrogated   by   the  commission.      If   an  order  can   not,   in   the 
judgment  of  the  commission,  be  complied  with  within  twenty  days, 
the  commission  may  grant  and  prescribe  such  additional  time  as  in 
its  judgment  is  reasonably  necessary  to  comply  with  the  order,  and 
may  on  application  and  for  good  cause  shown,  extend  the  time  for 
compliance  fixed  in  its  order.     A  full  and  complete  record  of  all 
proceedings  had  before  the  commission  or  any  commissioner  on  any 
formal  hearing  had,  and  all  testimony  shall  be  taken  down  by  a 
reporter   appointed   by   the   commission,    and   the   parties   shall   be 
entided  to  be  heard  in  person  or  by  attorney.     In  case  of  an  action 
to  review  any  order  or  decision  of  the  commission,  a  transcript  of 
tuch  testimony,  together  with  all  exhibits  or  copies  thereof  introduced 
and  all  information  secured  by  the  commission  on  its  own  initiative 
and  considered  by  it  in  rendering  its  order  or  decision,  and  of  the 
pleadings,  record  and  proceedings  in  the  cause,  shall  constitute  the 
record  of  the  commission;  provided,  that  on  review  of  an  order  or 
decision  of  the  commission,  the  petitioner  and  the  commission  may 
stipulate  that  a  certain  question  or  questions  alone  and  a  specified 
portion  only  of  the  evidence  shall  be  certified  to  the  supreme  court 
for  its  judgment,  whereupon  such  stipulation  and  the  question  or 
questions  and  the  evidence  therein  specified  shall  constitute  the  record 


Time  ma^  he 
extended. 

Complete  record 

of  proceedings 

shall  he  kept 

and  hecome 

record  of 

Commission. 


Transcript 
on  review. 


on  review. 


Public  Utility  May  Complain. 


Complaints  h\f  Sec.  62.  Any  public  utility  shall  have  a  right  to  complain  on 
public  utilities,  j^jjy  Qf  |}jg  grounds  upon  which  complaints  are  allowed  to  be  filed 
by  other  parties,  and  the  same  procedure  shall  be  adopted  and 
followed  as  in  other  cases,  except  that  the  complaint  may  be  heard 
ex  parte  by  the  commission  or  may  be  served  upon  any  parties 
designated  by  the  commission. 


PUBUC  UTILITIES  ACT 


227 


Increases  in  Rates. 

Sec.  63.      (a)      No  public  utility  shall  raise  any  rate,  fare,  toll.  Rates  ma^  not 

rental  or  charge  or  so  alter  any  classification,  contract,  practice,  rule  he  raised  except 

or  regulation  as  to  result  in  an  increase  in  any  rate.  fare.  toll,  rental  z}-  ^^  .    ?' 

I  I  ...  Commission. 

or    charge,    under   any    circumstances    whatsoever,    except   upon    a 

showing  before  the  commission  and  a  finding  by   the  commission 

that  such  increase  is  justified. 


{h)  Whenever  there  shall  be  filed  with  the  commission  any 
schedule  stating  an  individual  or  joint  rate,  fare,  toll,  rental,  charge, 
classification,  contract,  practice,  rule  or  regulation,  not  increasing  or 
resulting  in  an  increase  in  any  rate,  fare,  toll,  rental  or  charge,  the 
commission  shall  have  power,  and  it  is  hereby  given  authority,  either 
upon  complaint  or  upon  its  own  initiative  without  complaint,  at  once, 
and  if  it  so  orders,  without  answer  or  other  formal  pleadings  by 
the  interested  public  utility  or  utilities,  but  upon  reasonable  notice, 
to  enter  upon  a  hearing  concerning  the  propriety  of  such  rate,  fare, 
toll,  rental,  charge,  classification,  contract,  practice,  rule  or  regulation, 
and  pending  the  hearing  and  the  decision  thereon  such  rate,  fare, 
toil,  rental,  charge,  classification,  contract,  practice,  rule  or  regula- 
tion shall  not  go  into  effect;  provided,  that  the  period  of  suspension 
of  such  rate,  fare,  toll,  rental,  charge,  classification,  contract, 
practice,  rule  or  regulation  shall  not  extend  beyond  one  himdred 
and  twenty  days  beyond  the  time  when  such  rate,  fare,  toll,  rental, 
charge,  classification,  contract,  practice,  rule  or  regulation  would 
otherwise  go  into  effect  unless  the  commission,  in  its  discretion, 
extends  the  period  of  suspension  for  a  further  period  not  exceeding 
six  months.  On  such  hearing  the  commission  shall  establish  the 
rates,  fares,  tolls,  rentals,  charges,  classifications,  contracts,  practices, 
rules  or  regulations  proposed,  in  whole  or  in  part,  or  others  in  lieu 
thereof,  which  it  shall  find  to  be  just  and  reasonable.  All  such 
rates,  fares,  tolls,  rentals,  charges,  classifications,  contracts,  practices, 
rules  or  regulations  not  so  suspended  shall,  on  the  expiration  of  thirty 
days  from  the  time  of  filing  the  same  with  the  commission,  or  of 
such  lesser  time  as  the  commission  may  grant,  go  into  effect  and 
be  the  established  and  effective  rates,  fares,  tolls,  rentals,  charges, 
classificaticHis.  contracts,  practices,  rules  and  regulations,  subject  to 
the  power  of  the  commission,  after  a  hearing  had  on  its  own  motion 
or  upon  complaint,  as  herein  provided,  to  alter  or  modify  the  same. 


K^ommission 
may    suspend 
schedules    not 
showing  increase. 


Orders  of 
suspension 
should  not  he 
over  120  da\)s. 


Unless  extended 
not  over  six 
months. 


Otherrvise  to  go 
into  effect  in 
thirty  days. 


in 


228 


LOUIS  SLOSS  &  CO. 


Commission  May  Change  Orders  and  Decisions. 

Orders  changed       Sec.  64.     The  commission  may  at  any  time,  upon  notice  to  the 
b}f  Commission  public  utility  affected,  and  after  opportunity  to  be  heard  as  provided 
have  effect  of  -^  ^^  ^^^^  ^£  complamts,   rescind,   alter  or  amend  any  order  or 
ongmal  orders.    ...  i    i      •        a  i  •  j«  k    •  j* 

decision  made  by  it     Any  order  rescmdmg,  altermg  or  amendmg 

a  prior  order  or  decision  shall,  when  served  upon  the  public  utility 
affected,  have  the  same  effect  as  is  herein  provided  for  original 
orders  or  decisions. 

Orders  and  Decisions  Conclusive  in  Collateral 

Proceedings. 

Orders    con-       Sec.   65.      In  all  collateral   actions  or  proceedings,   the  orders 
elusive  in  col-  ^nd  decisions  of  the  commission  which  have  become  final  shall  be 
lateral  pro-  conclusive. 
ceedmgs. 

Rehearings. 


Applications  for 
re-hearings. 


No  cause  for 

action  until 

after  application 

for  re-hearing. 


Grounds  must 

be  set  forth  in 

application  for 

re-hearing. 


Sec.  66.  After  any  order  or  decision  has  been  made  by  the 
commission,  any  party  to  the  action  or  proceeding,  or  any  stock- 
holder or  bondholder  or  other  party  pecuniarily  interested  m  the 
public  utility  affected,  may  apply  for  a  rehearing  in  respect  to  any 
matters  determined  in  said  action  or  proceeding  and  specified  in  the 
application  for  rehearing,  and  the  commission  may  grant  and  hold 
such  rehearing  on  said  matten,  if  in  its  judgment  sufficient  reason 
therefor  be  made  to  appear.  No  cause  of  action  arising  out  of 
any  order  or  decision  of  the  commission  shall  accrue  in  any  court 
to  any  corporation  or  person  unless  such  corporation  or  person  shall 
have  made,  before  the  effective  date  of  said  order  or  decision, 
application  to  the  commission  for  a  rehearing.  Such  application 
shall  set  forth  specifically  the  ground  or  grounds  on  which  the 
applicant  considers  said  decision  or  order  to  be  unlawful.  No 
corporation  or  person  shall  in  any  court  urge  or  rely  on  any  ground 
not  so  set  forth  in  said  application.  Any  application  for  a  rehearing 
made  ten  days  or  more  before  the  effective  date  of  the  order  as 
to  which  a  rehearing  is  sought,  shall  be  either  granted  or  denied 
before  such  effective  date,  or  the  order  shall  stand  suspended  until 
such  application  is  granted  or  denied.  Any  application  for  a 
rehearing  made  withm  less  than  ten  days  before  the  effective  date 


PUBLIC  UTILITIES  ACT 


229 


of  the  order  as  to  which  a  rehearing  is  sought,  and  not  granted 
within  twenty  days,  may  be  taken  by  the  party  making  the 
application  to  be  denied,  unless  the  effective  date  of  the  order  is 
extended  for  the  period  of  the  pendency  of  the  application.  If  any 
application  for  a  rehearing  be  granted  without  a  suspension  of  the 
order  involved,  the  commission  shall  forthwith  proceed  to  hear  the 
matter  wi^  all  despatch  and  shall  determine  the  same  within  twenty 
days  after  final  submission,  and  if  such  determination  is  not  made 
within  said  time,  it  may  be  taken  by  any  party  to  the  rehearing 
that  the  order  involved  is  affirmed.  An  application  for  rehearing 
shall  not  excuse  any  corporation  or  person  from  complying  with  and 
obeymg  any  order  or  decision,  or  any  requirement  of  any  order 
or  decision  of  the  commission  theretofore  made,  or  operate  in  any 
manner  to  stay  or  postpone  the  enforcement  thereof,  except  in  such 
cases  and  upon  such  terms  as  the  commission  may  by  order  direct 
If,  after  such  rehearing  and  a  consideration  of  all  the  facts,  including 
those  arising  since  the  making  of  the  order  or  decision,  the  commission 
shall  be  of  the  opinion  that  the  original  order  or  decision  or  any 
part  thereof  is  in  any  respect  unjust  or  unwarranted,  or  should  be 
changed,  the  commission  may  abrogate,  change  or  modify  the  same. 
An  order  or  decision  made  after  such  rehearing  abrogating,  changing 
or  modifying  the  original  order  or  decision  shall  have  the  same  force 
and  effect  as  an  original  order  or  decision,  but  shall  not  affect  any 
right  or  the  enforcement  of  any  right  arising  from  or  by  virtue  of 
the  original  order  or  decision  unless  so  ordered  by  the  commission. 


Orders  of 
Commission 
must  he  obeyed 
pending 
re-hearing 
except.  . . 

Commission  majf 
modify^  orders. 


Review. 

Sec.  67.  Within  thirty  days  after  the  application  for  a 
rehearing  is  denied,  or,  if  the  application  is  granted,  then  within 
thirty  days  after  the  rendition  of  the  decision  on  rehearing,  the 
applicant  may  apply  to  the  supreme  court  of  this  state  for  a  writ 
of  certiorari  or  review  (hereinafter  referred  to  as  a  writ  of  review) 
for  the  purpose  of  having  the  lawfulness  of  the  original  order  or 
decision  or  the  order  or  decision  on  rehearing  inquired  into  and 
determined.  Such  writ  shall  be  made  returnable  not  later  than 
thirty  days  after  the  date  of  the  issuance  thereof,  and  shall  direct 
the  commission  to  certify  its  record  in  the  case  to  the  court  On 
the  return  day,  the  cause  shall  be  heard  by  the  supreme  court,  unless 


Supreme  Court 
may  rcvzen». 


230 


LOUIS  SLOSS  &  CO. 


No  neiv  or 

additional 

evidence  ma^ 

be  introduced 

in  the 

Supreme  Court. 


Findings  of 

Commission  on 

questions  of 

fact  final. 


for  a  good  reason  shown  the  same  be  continued.  No  new  or 
additional  evidence  may  be  introduced  in  the  supreme  court,  but 
the  cause  shall  be  heard  on  the  record  of  the  commission  at  certified 
to  by  it  The  review  shall  not  be  extended  further  than  to  determme 
whether  the  conunission  has  regularly  pursued  its  authority,  including 
a  determination  of  whether  the  order  or  decision  under  review 
violates  any  right  of  the  petitioner  under  the  constitution  of  the 
United  States  or  of  the  State  of  California.  The  findings  and 
conclusions  of  the  commission  on  questions  of  fact  shall  be  final 
and  shall  not  be  subject  to  review;  such  questions  of  fact  shall 
include  ultimate  facts  and  the  findings  and  conclusions  of  the 
commission  on  reasonableness  and  discrimination.  The  commission 
and  each  party  to  the  action  or  proceeding  before  the  commission 
shall  have  the  right  to  appear  in  the  review  proceeding.  Upon  the 
hearing  the  supreme  court  shall  enter  judgment  either  affirming  or 
setting  aside  the  order  or  decision  of  the  commission.  The  provisions 
of  the  code  of  civil  procedure  of  this  state  relating  to  writs  of 
review  shall,  so  far  as  applicable  and  not  in  conflict  with  the 
provisions  of  this  act.  apply  to  proceedings  instituted  in  the  supreme 
court  under  the  provisions  of  this  section.  No  court  of  this  state 
(except  the  supreme  court  to  the  extent  herein  specified)  shall  have 
jurisdiction  to  review,  reverse,  correct  or  annul  any  order  or  decision 
of  the  commission  or  to  suspend  or  delay  the  execution  or  operation 
thereof,  or  to  enjoin,  restrain  or  interfere  with  the  commission  in 
the  performance  of  its  official  duties;  provided,  that  the  writ  of 
mandamus  shall  lie  from  the  supreme  court  to  the  commission  in  all 
proper  cases. 

Suspension  of  Commission's  Orders. 

Supreme  Court      Sec.  68.      (a)     The  pendency  of  a  writ  of  review  shall  not  of 

ma}f  suspend  itself  stay  or  suspend  the  operation  of  the  order  or  decision  of  the 

orders  ^™™^''^°"*  ^"^  during  the  pendency  of  such  writ,  the  supreme  court 

in  its   discretion  may  stay  or  suspend,   in  whole  or  in  part,   the 

operation  of  the  commission's  order  or  decision. 

Upon  three       ^^^     ^^  *^'^^'  "^     slaying  or  suspending  an  order  or  decision 

da)fs  notice  and  ^^  ^  commission  shall  be  made  by  the  supreme  court  otherwise 

after  hearing,  ^^n  upon  three  days*  notice  and  after  hearing,  and  if  the  order 


No  other 

courts  of  State 

shall  have 

jurisdiction. 


PUBUC  UTILITIES  ACT 


2)1 


or  decision  of  the  commission  is  suspended,  the  order  suspending  the 
same  shall  contain  a  specific  finding  based  upon  evidence  submitted 
to  the  court  and  identified  by  reference  thereto,  that  great  or 
irreparable  damage  would  otherwise  result  to  the  petitioner  and 
specifying  the  nature  of  the  damage. 

(c)  In  case  die  order  or  decision  of  the  commission  is  stayed 
or  suspended,  the  order  of  the  court  shall  not  become  effective  until 
a  suspending  bond  shall  first  have  been  executed  and  filed  with, 
and  approved  by  the  commission  (or  approved,  on  review,  by  the 
supreme  court),  payable  to  the  people  of  the  State  of  California, 
and  sufficient  in  amount  and  security  to  insure  the  prompt  payment, 
by  the  party  petitioning  for  the  review,  of  all  damages  caused  by 
the  delay  in  the  enforcement  of  the  order  or  decision  of  the 
commission,  and  of  all  moneys  which  any  person  or  corporation  may 
be  compelled  to  pay,  pending  the  review  proceedings,  for  transpor- 
tation, transmission,  product,  commodity  or  service  in  excess  of  the 
charges  fixed  by  the  order  or  decision  of  the  commission,  in  case 
said  order  or  decision  is  sustained.  The  supreme  court,  in  case 
it  stays  or  suspends  the  order  or  decision  of  the  commission  in  any 
matter  affecting  rates,  fares,  tolls,  rentals,  charges  or  classifications, 
shall  also  by  order  direct  the  public  utility  affected  to  pay  into  court, 
from  time  to  time,  there  to  be  impounded  until  the  final  decision  of 
the  case,  or  into  some  bank  or  trust  company  paying  interest  on 
deposits,  under  such  conditions  as  the  court  may  prescribe,  all  sums 
of  money  which  it  may  collect  from  any  corporation  or  person  in 
excess  of  the  sum  such  corporation  or  person  would  have  been 
compelled  to  pay  if  the  order  or  decision  of  the  commission  had 
not  been  stayed  or  suspended. 

(d)  In  case  the  supreme  court  stays  or  suspends  any  order  or 
decision  lowering  any  rate.  fare.  toll,  rental,  charge  or  classification, 
the  commission,  upon  the  execution  and  approval  of  said  suspending 
bond,  shall  forthwith  require  the  public  utility  affected,  under 
penalty  of  the  immediate  enforcement  of  the  order  or  decision  of 
the  commission  (pending  the  review  and  notwithstanding  the  sus- 
pending order),  to  keep  such  accounts,  verified  by  oath,  as  may, 
m  the  judgment  of  the  commission,  suffice  to  show  the  amounts 
being  charged  or  received  by  such  public  utility,  pending  the  review. 


Suspending  bond 
must  be  filed. 


Damages, 


Monejf  collected 
in  excess  of  rates 
authorized  b\f 
Commission 
shall  be 
impounded 
pending 
settlement  of 
litigation. 


Public  utilify 
must  l^eep 
accurate  account 
of  excess 
charges  collected 
pending 
settlement  of 
litigation. 


232 


LOUIS  SLOSS  &  CO. 


PUBLIC  UTILITIES  ACT 


233 


\ 


J  ■ 


r-    1 


Impounded 

mone\f  to  be 

promptly^  paid 

to  persons 

entitled  thereto. 


in  excess  of  the  charges  allowed  by  the  order  or  decision  of  the 
commission,  together  with  the  names  and  addresses  of  the  corpora- 
tions or  persons  to  whom  overcharges  will  be  refundable  in  case 
the  charges  made  by  the  public  utility,  pending  the  review,  be  not 
sustained  by  the  supreme  court  The  court  may,  from  time  to 
time,  require  said  party  petitioning  for  a  review  to  give  additional 
security  on,  or  to  increase  the  said  suspending  bond,  whenever  in 
the  opinion  of  the  court  the  same  may  be  necessary  to  insure  the 
prompt  payment  of  said  damages  and  said  overcharges.  Upon  the 
final  decision  by  the  supreme  court,  all  moneys  which  the  public 
utility  may  have  collected,  pending  the  appeal  in  excess  of  those 
authorized  by  such  final  decision,  together  with  interest,  in  case  tht 
court  ordered  the  deposit  of  such  moneys  in  a  bank  or  trust 
company,  shall  be  promptly  paid  to  the  corporations  or  persons 
entitled  thereto,  in  such  manner  and  through  such  methods  of 
distribution  as  may  be  prescribed  by  the  commission.  If  any  such 
moneys  shall  not  have  been  claimed  by  the  corporations  or  persons 
entitled  thereto  within  one  year  from  the  final  decision  of  the 
supreme  court,  the  commission  shall  cause  notice  to  such  corporations 
or  persons  to  be  given  by  publication,  once  a  week  for  two 
successive  weeks,  in  a  newspaper  of  general  circulation,  printed  and 
published  in  the  city  and  county  of  San  Francisco,  and  such  other 
newspaper  or  newspapers  as  may  be  designated  by  the  commission, 
said  notice  to  state  the  names  of  the  corporations  or  persons  entided 
to  such  moneys  and  the  amount  due  each  corporation  or  person. 
All  moneys  not  claimed  within  three  months  after  the  publication 
of  said  notice  shall  be  paid  by  the  public  utility,  under  the  direction 
of  the  commission,  into  the  state  treasury  for  the  benefit  of  the 
general  fund. 


Method  of 

payment 

prescribed  by 

Commission. 


Court  Proceedings:   Preference. 

PrefererKe  to  •^^C*  ^^*  ^^  actions  and  proceedings  under  this  act,  and  all 
Commission  actions  or  proceedings  to  which  the  commission  or  the  people  of  the 

cases  m  court.  State  of  Califomia  may  be  parties,  and  in  which  any  question 
arises  under  this  act,  or  under  or  concerning  any  order  or  decision 
of  the  commission,  shall  be  preferred  over  all  othei  civil  causes 
except  election  causes  and  shall  be  heard  and  determined  in  prefer- 


ence to  all  other  civil  business  except  election  causes,  irrespective 
of  position  on  the  calendar.  The  same  preference  shall  be  granted 
upon  application  of  the  attorney  of  the  commission  in  any  action 
or  proceeding  in  which  he  may  be  allowed  to  intervene. 

Physical  Valuation:   Procedure. 

Sec.  70.  For  the  purpose  of  ascertaining  the  matters  and  things 
specified  in  section  forty-seven  of  this  act,  concerning  the  value  of 
the  property  of  public  utilities,  the  commission  may  cause  a  hearing 
or  hearings  to  be  held  at  such  time  or  times  and  place  or  places 
as  the  commission  may  designate.  Before  any  hearing  is  had,  the 
commission  shall  give  the  public  utility  affected  thereby  at  least 
thirty  days*  written  notice,  specifying  the  time  and  place  of  such 
hearing,  and  such  notice  shall  be  sufficient  to  authorize  the  com- 
mission to  inquire  into  the  matters  designated  in  this  section  and 
in  said  section  forty-seven  of  this  act,  but  this  provision  shall  not 
prevent  the  commission  from  making  any  preliminary  examination 
or  investigation  into  the  matters  herein  referred  to,  or  from  mquiring 
into  such  matters  in  any  other  investigation  or  hearing.  All  public 
utilities  affected  shall  be  entitled  to  be  heard  and  to  introduce 
evidence  at  such  hearing  or  hearings.  The  commission  is  empowered 
to  resort  to  any  other  source  of  information  available.  The  evidence 
introduced  at  such  hearing  shall  be  reduced  to  writing  and  certified 
under  the  seal  of  the  commission.  The  commission  shall  make  and 
file  its  findings  of  fact  in  writing  upon  all  matters  concerning  which 
evidence  shall  have  been  introduced  before  it  which  in  its  judgment 
have  bearing  on  the  value  of  the  property  of  the  public  utility 
affected.  Such  findings  shall  be  subject  to  review  by  the  supreme 
court  of  this  state  in  the  same  manner  and  within  the  same  time 
as  other  orders  and  decisions  of  the  commission.  The  findings  of 
the  commission  so  made  and  filed,  when  properly  certified  under 
the  seal  of  the  commission,  shall  be  admissible  in  evidence  in  any 
action,  proceeding  or  hearing  before  the  commission  or  any  court, 
in  which  the  conmiission,  the  state  or  any  officer,  department  or 
institution  thereof,  or  any  county,  city  and  county,  municipality  or 
other  body  politic  and  the  public  utility  affected  may  be  interested 
whether  arising  under  the  provisions  of  this  act  or  otherwise,  and 


Hearings  by 
Commission  to 
ascertain 
physical 
valuation  of 
public  utilities. 


Preliminary 
examination. 

Evidence, 


Finding  subject 
to  revierv  by 
Supreme  Court, 


Findings  of 
Commission 
admissable  as 
evidence  in  any 
action. 


li 


234 


LOUIS  SLOSS  &  CO. 


ii 


f'l 


«  > 


such  findings,  when  so  introduced,  shall  be  conclusive  evidence  of 
the  facts  therein  stated  as  of  the  date  therein  stated  under  conditions 
then  existing,  and  such  facts  can  only  be  controverted  by  showing 
a  subsequent  change  in  conditions  bearing  upon  the  facts  therein 
Further  determined.  The  conunission  may  from  time  to  time  cause  further 
hearings,  hearings  and  investigations  to  be  had  for  the  purpose  of  making 
revaluations  or  ascertaining  the  value  of  any  betterments,  improve- 
ments, additions  or  extensions  made  by  any  public  utility  subsequent 
to  any  prior  hearing  or  investigation,  and  may  examine  into  all 
matters  which  may  change,  modify  or  affect  any  finding  of  fact 
previously  made,  and  may  at  such  time  make  findings  of  fact 
supplementary  to  those  theretofore  made.  Such  hearings  shall  be 
had  upon  the  same  notice  and  be  conducted  in  the  same  manner, 
and  the  findings  so  made  shall  have  the  same  force  and  effect  as 
is  provided  herein  for  such  original  notice,  hearing  and  findings; 
provided,  that  such  findings  made  at  such  supplemental  hearings 
or  investigations  shall  be  considered  in  connection  with  and  as  a 
part  of  the  original  findings  except  in  so  far  as  such  supplemental 
findings  shall  change  or  modify  the  findings  made  at  the  original 
hearing  or  investigation. 


\f' 


*  ! 


IN 


11 


ii 


Excessive  or  Discriminatory  Charges:   Reparation. 

Refunds  of  Sec.  71.  (a)  When  complaint  has  been  made  to  the  com- 
excessrve  or  mission  concerning  any  rate,  fare,  toll,  rental  or  charge  for  any 
dtscriminator})  p^oJuct  or  commodity  furnished  or  service  performed  by  any  public 
utility,  and  the  commission  has  found,  after  investigation,  that  the 
public  utility  has  charged  an  excessive  or  discriminatory  amount  for 
such  product,  commodity  or  service,  the  conunission  may  order  that 
the  public  utility  make  due  reparation  to  the  complainant  therefor, 
with  interest  from  the  date  of  collection;  provided,  no  discrimination 
will  result  from  such  reparation. 

Suits  to       (h)     If  the  public  utility  does  not  comply  with  the  order  for 

recover.  i\^^  payment  of  reparation  within  the  time  specified  in  such  order, 

.       suit  may   be   instituted   in   any   court   of   competent  jurisdiction   to 

^i^h  ^/  //  ^^^°^*'  '^^  same.     All  complaints  concerning  excessive  or  discrim- 

Tvithin  trvo  ^^^^^  charges  shall  be  filed  with  the  commission  within  two  years 

}fears.  from  the  time  the  cause  of  action  accrues,  and  the  petition  for  the 


PUBUC  UTILITIES  ACT 


25S 


enforcement  of  the  order  shall  be  filed  in  the  court  within  one  year 
from  the  date  of  the  order  of  the  commission.  The  remedy  in  this 
section  provided  shall  be  cumulative  and  in  addition  to  any  other 
remedy  or  remedies  in  this  act  provided  in  case  of  failure  of  a 
public  utility  to  obey  an  order  or  decision  of  the  conunissimi. 

Commission  Shall  Enforce  Laws. 

Sec.  72.     It  is  hereby  made  the  duty  of  the  commission  to  tec  Commission 
that  the  provisions  of   the   constitution   and   statutes   of   this  state  map  sue  in 
affecting  public  utQities,  the  enforcement  of  which  is  not  specifically  ^^^  ^^  P«°P^«- 
vested  in  some  other  officer  or  tribunal,  are  enforced  and  obeyed, 
and  that  violations  thereof  are  promptly  prosecuted   and  penalties 
due  the  state  therefor  recovered  and  collected,  and  to  this  end  it 
may  sue  in  the  name  of  the  people  of  the  State  of  California.     Upon 
the  request  of  the  commission,  it  shall  be  the  duty  of  the  attorney  Public  attorneys 
general  or  the  district  attorney  of  the  proper  county  or  city  and  shall  assist 
county  to  aid  in  any  investigation,  hearing  or  trial  had  under  the  ^o^^^^^^^- 
provisions  of   this   act,    and   to   institute   and   prosecute   actions   or 
proceedings  for  the  enforcement  of  the  provisions  of  the  constitution 
and   statutes   of   this   state    affecting   public   utilities   and    fo'   thf 
punishmeni  of   all  violations   thereof. 

Public  Utilities  Liable  for  Damages. 

Sec.   73.      (a)      In  case  any  public  utility  shall  do,  cause  to  Public  utilities 

be  done  or  permit  to  be  done  any  act,  matter  or  thing  prohibited,  ^^^  ^^  ^"^" 

forbidden  or  declared  to  be  unlawful,  or  shall  omit  to  do  any  act,  '^  ^1/"^,  ^" 

.,,1  -III  ••  exemplary 

matter  or  thmg  required  to  be  done,  either  by  the  constitution,  any  damages. 

law  of  this  state  or  any  order  or  decision  of  the  commission,  such 

public  utility  shall  be  liable  to  the  persons  or  corporations  affected 

thereby  for  all  loss,  damages  or  injury  caused  thereby  or  resulting 

therefrom,  and  if  the  court  shall  find  that  the  act  or  omission  was 

wilful,   the  court  may  in  addition  to   the  actual  damages  award 

damages  for  the  sake  of  example  and  by  way  of  punishment     An 

action  to  recover  for  such  loss,  damage  or  injury  may  be  brought  in 

any  court  of  competent  jurisdiction  by  any  corporation  or  person. 


1 

i 


\  i 


,1 

i 


236 


LOUIS  SLOSS  &  CO. 


(h)  No  recovery  as  in  this  section  provided  shall  in  any  manner 
atfect  a  recovery  by  the  state  of  the  penalties  in  this  act  provided 
or  die  exercise  by  the  commission  of  its  power  to  punish  for  contempt. 

Effect  of  Act  on  Release  of  Damages:   Penalties 

Cumulative. 

This  act  does       Sec.  74.     (a)     This  act  shall  not  have  the  effect  to  release  or 

not  effect  existing  ^aive  any  right  of  action  by  the  state,  the  commission,  or  any  person 

nghis  of  action,  ^^  corporation  for  any  right,  penalty  or  forfeiture  which  may  have 

arisen  or  accrued  or  may  hereafter  arise  or  accrue  under  any  law 
of  this  state. 

Penalties  under       (b)     All  penalties  accruing  under  this  act  shall  be  cumulative 

this  act  of  each  other,  and  a  suit  for  the  recovery  of  one  penalty  shall  not 

cumulative  and  y^  ^  y^^^  ^  ^^  ^f^^^  ^^  recovery  of  any  other  penalty  or  forfeiture 

no  bar  to  other  ^^  y^^  ^  ]y^j  ^^  j^y  criminal  prosecution  against  any  public  utility, 
prosecution.  -.,.  il<^  l 

or  any  officer,  director,   agent  or  employee  thereof,   or  any  other 

corporation  or  person,  or  be  a  bar  to  the  exercise  by  the  commission 

of  its  power  to  punish  for  contempt 


L<  ^1 


Summary  Proceedings. 

Commission       Sec.  75.     Whenever  the  commission  shall  be  of  the  opinion  that 

shall  act  in  the  any  public  utility  is  failing  or  omitting  or  about  to  fail  or  omit, 

name  of  the  ^  j^  anything  required  of  it  by  law,  or  by  any  order,  decision, 

people  to  enforce  ^^^  direction  or  requirement  of  tfie  commission,  or  is  doing  anything 

public  utilities.  ^^  *^"*  ^  ^°  anything,  or  permitting  anything  or  about  to  permit 

anything  to  be  done,  contrary  to  or  in  violation  of  law,  or  of  any 

order,  decision,  rule,  direction  or  requirement  of  the  commission,  it 

shall  direct  the  attorney  of  the  commission  to  commence  an  action 

or  proceeding  in  the  superior  court  in  and  for  the  county,  or  city 

and  county,  in  which  the  cause  or  some  part  thereof  arose,  or  in 

which  the  corporation  complained  of,  if  any,  has  its  principal  place 

of  business,  or  in  which  the  person,  if  any,  complained  of,  resides, 

in  the  name  of  the  people  of  the  State  of  California,  for  the  purpose 

of    having    such    violations    or    threatened    violations    stopped    and 

prevented,  either  by  mandamus  or  injunction.     The  attorney  of  the 

commission    shall    thereupon   begin    such    action    or   proceeding   by 


PUBUC  UTIUTIES  ACT 


237 


petition  to  such  superior  court,  alleging  the  violation  or  threatened 

violation  complained  of,  and  praying  for  appropriate  relief  by  way 

of  mandamus  or  mjunction.     It  shall  thereupon  be  the  duty  of  Ae  I'llj^y^^^^ 

court  to  specify  a  time,  not  exceeding  twenty  days  after  the  service  ^^  ^^,^piaint 

of  the  copy  of  the  petition,  within  which  the  public  utility  complamed 

of  must  answer  the  petition,  and  in  the  mean  time  said  public  utility 

may  be  restrained.     In  case  of  default  in  answer,  or  after  answer, 

the  court  shaU  immediately  inquire  into  the  facte  and  circumstances 

of  the  case.     Such  corporations  or  persons  as  the  court  may  deem 

necessary  or  proper  to  be  joined  as  parties,  in  order  to  make  ite 

judgment,  order  or  writ  effective,  may  be  joined  as  parties.     The 

final  judgment  m  any  such  action  or  proceeding  shall  either  dismiss 

the  action  of  proceeding  or  direct  that  the  writ  of  mandamus  or 

injunction  issue  or  be  made  permanent  as  prayed  for  in  the  petition, 

or  m  such  modified  or  other  form  as  will  afford  appropriate  relief. 

An  appeal  may  be  taken   to  the  supreme  court  from  such   final  f^^^^J'J^^ 

judgment  in  the  same  manner   and  with   the  same  effect,   subject  ^^^^^^^  (-^^^^ 

to  the  provisions  of  this  act.  as  appeals  are  taken  from  judgmente 

of  the  superior  court  in  other  actions  for  mandamus  or  injunction. 

Penalties,  Violations  by  Public  Utilities. 

Sec.  76.  (a)  Any  public  utflily  which  violates  or  faQs  to  Public  utilities 
comply  with  any  provision  of  the  constitution  of  this  state  or  of  '"^V  be  fined. 
this  act.  or  which  fails,  omite  or  neglecte  to  obey,  observe  or  comply 
with  any  order,  decision,  decree,  rule,  direction,  demand  or  require- 
ment or  any  part  or  provision  thereof,  of  the  commission,  in  a  case 
in  which  a  penalty  has  not  hereinbefore  been  provided  for  such 
public  utility,  is  subject  to  a  penalty  of  not  less  than  five  hundred 
dollars  nor  more  than  two  thousand  dollars  for  each  and  every 
offense. 


(h)  Every  violation  of  the  provisions  of  this  act  or  of  any  order, 
decision,  decree,  rule,  direction,  demand  or  requirement  of  the 
commission,  or  any  part  or  portion  thereof  by  any  corporation  or 
person  is  a  separate  and  distinct  offense,  and  in  case  of  a  continuing 
violation  each  day's  continuance  thereof  shall  be  and  be  deemed  to 
be  a  separate  and  distinct  offense. 


Every  violation 
of  this  act  a 
separate  offense. 

Each  dayj^s 
violation  a 
separate  offense. 


w 


id 


i 


238 


LOUIS  SLOSS  &  CO. 


Public  utilit\f  (c)  In  construing  and  enforcing  the  provisions  of  this  act 
responsible  for  relating  to  penalties,  the  act.  omission  or  failure  of  any  officer,  agent 
^ar^rfl^H^L  °'  employee  of  any  public  utility,   acting  within  the  scope  of  his 

or  employees,  o^^*^*  duties  or  employment,  shall  m  every  case  be  and  be  deemed 
to  be  the  act.  omission  or  failure  of  such  public  utility. 

Penalties,  Violations  by  Officers.  Agents  or  Employees 

OF  Public  Utilities. 

Officers,  agents      Sec.  77.    Every  officer,  agent  or  employee  of  any  public  utility, 

or  emplo-^ees  of  who  violates  or  fails   to  comply   with,   or  who  procures,   aids  or 

pMc  utilities  abcU  any  violation  by  any  public  utility  of  any  provision  of  the 

Imprisoned  or  *^**"*'*'"^°"  ^^  ^^  «***«  o'  o^  ^"  *c^  ^^  ^^^  f*^*  to  obey, 
both,  ^*erve  or  comply  with  any  order,  decision,  rule,  direction,  demand 
or  requirement  or  any  part  or  provision  thereof,  of  the  commission, 
or  who  procures,  aids  or  abets  any  public  utility  in  its  failure  to 
obey,  observe  and  comply  with  any  such  order,  decision,  rule, 
direction,  demand  or  requirement,  or  any  part  or  provision  thereof 
in  a  case  in  which  a  penalty  has  not  hereinbefore  been  provided 
for  such  officer,  agent  or  employee,  is  guilty  of  a  misdemeanor  and 
is  punishable  by  a  fine  not  exceeding  one  thousand  dollars,  or  by 
imprisonment  in  a  county  jail  not  exceeding  one  year,  or  by  both 
such  fine  and  imprisonment. 

Penalties,  Violations  by  Corporations  Other  Than 

Public  Utiuties. 

Fines  for  corpora-  Sec.  78.  Every  corporation,  other  than  a  public  utility,  which 
tions  other  than  violates  any  provision  of  this  act.  or  which  fails  to  obey,  observe 
public  utilities,  or  comply  with  any  order,  decision,  rule,  direction,  demand  or 
requirement,  or  any  part  or  provision  thereof,  of  the  conmiission, 
m  a  case  in  which  a  penalty  has  not  hereinbefore  been  provided 
for  such  corporation,  is  subject  to  a  penalty  of  not  less  than  five 
hundred  dollars  nor  more  than  two  thousand  dollars  for  each  and 
every  otfense. 


PUBLIC  UTILITIES  ACT 


239 


n 


Individuals  not 
officers,  etc.,  of 
public  utilities 
ma}f  be  fined 
or  imprisoned, 
or  both. 


Penalties,  Violations  by  Persons  Other  Than  Officers, 

ETC.,  OF  Public  Utilities. 

Sec.  79.  Every  person  who,  either  individually,  or  acting  as 
an  officer,  agent  or  employee  of  a  corporation  other  than  a  public 
utility,  violates  any  provision  of  this  act,  or  fails  to  observe,  obey 
or  comply  with  any  order,  decision,  rule,  direction,  demand  or 
requirement,  or  any  part  or  portion  thereof,  of  the  commission,  or 
who  procures,  aids  or  abets  any  such  public  utility  in  its  violation 
of  this  act.  or  in  its  failure  to  obey,  observe  or  comply  with  any 
such  order,  decision,  rule,  direction,  demand  or  requirement,  or  any 
part  or  portion  thereof,  in  a  case  in  which  a  penalty  has  not  herein- 
before been  provided  for  such  person,  is  guilty  of  a  misdemeanor, 
and  is  punishable  by  a  fine  not  exceeding  one  thousand  dollars,  or 
by  imprisonment  in  a  county  jafl  not  exceeding  one  year,  or  by  both 
such  fine  and  imprisonment 

Suits  for  Penalties. 

Sec.  80.     Actions  to  recover  penalties  under  this  act  shall  be  Suits  for 
brought  in  the  name  of  the  people  of  the  Sute  of  California,  in  penalties  ma}f  be 
the  superior  court  in  and  for  the  county,   or  city  and  county,   in  ^^^^sh^^" 
which    the   cause   or    some   part   thereof   arose,    or   in    which    the  *"^^'°''  ^^"^^ 
corporation  complained  of,  if  any.  has  its  principal  place  of  business, 
or  in  which  the  person,  if  any,  complained  of,  resides.     Such  action 
shall    be    commenced    and    prosecuted    to    final    judgment    by    the 
attorney   of   the    commission.      In    any    such    action,    all    penalties 
incurred  up  to  the  time  of  conmiencing  the  same  may  be  sued  for 
and  recovered.      In  all  such  actions,   the  procedure  and  rules  of 
evidence  shall  be  the  same  as  in  ordinary  civil  actions,  except  at 
otherwise  herein  provided.     All  fines  and  penalties  recovered  by  the 
state  in  any  such  action,  together  with  the  costs  thereof,  shall  be 
paid  into  the  state  treasury  to  the  credit  of  the  general  fund.     Any 
such  action  may  be  compromised  or  discontinued  on  application  of 
the  commission  upon  such  terms  as  the  court  shall  approve  and  order. 

Contempt  Proceedings.  Punishment  for 

_  ....  contempt  same 

Sec.  81.     Every  public  utility,  corporation  or  person  which  shall  as  in  courts  of 

fail   to  observe,   obey  or  comply  with  any  order,   decision,   rule,  record. 


i^..V^--«t-' 


..^^     • 


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240 


LOUIS  SLOSS  &  CO. 


PUBUC  UTILITIES  ACT 


241 


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regulation,  direction,  demand  or  requirement,  or  any  part-  or  portion 
thereof,  of  the  commission  or  any  commissioner  shall  be  in  contempt 
of  the  commission,  and  shall  be  punishable  by  the  commission  for 
contempt  in  the  same  manner  and  to  the  same  extent  as  contempt 
is  punished  by  courts  of  record.  The  remedy  prescribed  in  this 
section  shall  not  be  a  bar  to  or  atfect  any  other  remedy  prescribed 

Punishment  in  this  act,  but  shall  be  cumulative  and  in  addition  to  such  other 

cumulative,  remedy  or  remedies. 

ARTICLE  V. 

CONSTRUCTION:     SAVING  CLAUSE:     APPROPRIA- 
TION:   REPEAL. 

Effect  of  Act  of  Existing  Powers  of  Any  City  and 
County,  or  Incorporated  City  or  Town. 


Municipalities 

ma^  retain 

control  of  public 

utilities  or  ma}f 

surrender  such 

control  or  re-invest 

themselves 

with  it. 


Sec.  82.  This  act  shall  not  atfect  such  powers  of  control  over 
any  public  utility  vested  in  any  city  and  county  or  mcorporated 
city  or  town  as.  at  an  election  to  be  held  pursuant  to  laws  to  be 
hereafter  passed  by  the  legislature,  a  majority  of  the  qualified 
electors  voting  thereon  of  such  city  and  county,  or  incorporated 
city  or  town,  shall  vote  to  retain,  and  until  such  election  such 
powers  shall  continue  unimpaired  in  such  city  and  county  or 
incorporated  city  or  town;  but  if  the  vole  so  taken  shall  not  favor 
the  continuation  of  such  powers,  they  shall  thereafter  vest  in  the 
commission;  provided,  that  where  any  such  city  and  county  or 
incorporated  city  or  town  shall  have  elected  to  continue  any  powers 
respecting  public  utilities,  it  may.  by  a  vote  of  a  majority  of  iU 
qualified  electors  voting  thereon,  thereafter  surrender  such  powers 
to  the  commission  in  the  manner  to  be  prescribed  by  the  legislature; 
or  if  such  municipal  corporation  shall  have  surrendered  any  powers 
to  the  commission,  it  may.  by  like  vote,  thereafter  reinvest  itself 
with  such  power. 

Effect  of  Act  on  Pending  Actions  and  Proceedings. 

affell  i^endlng       Sec.  83.        (a)     This  act  shaU  not  atfect  pending  actions  or 

actions  of  proceedings   brought   by   or    against   the    people   of   the   State    of 

Commission.  California  or  the  commission,  or  by  any  other  person  or  corporation 


All  previous 
proceedings  of 
Commission 
validated. 


under  the  provisions  of  chapters  20  or  386  of  the  laws  of  1911, 
but  the  same  may  be  prosecuted  and  defended  with  the  same  effect 
as  though  this  act  had  not  been  passed.  Any  investigation,  hearing. 
or  examination  undertaken,  commenced,  instituted  or  prosecuted  prior 
to  the  taking  effect  of  this  act  may  be  conducted  and  continued 
to  a  final  determination  in  the  same  manner  and  with  the  same 
effect  as  if  it  had  been  undertaken,  commenced,  instituted  or  prose- 
cuted in  accordance  with  the  provisions  of  this  act.  All  proceedings 
hitherto  taken  by  the  commission  in  any  such  investigation,  hearing 
or  examination  are  hereby  ratified,  approved,  validated  and  con- 
firmed and  all  such  proceedings  shall  have  the  same  force  and 
effect  as  if  they  had  been  undertaken,  commenced,  instituted,  and 
prosecuted  under  the  provisions  of  this  act  and  in  the  manner  herein 
prescribed. 

(h)  No  cause  of  action  arising  under  the  provisions  of  chapters 
20  or  386  of  the  laws  of  191 1  shall  abate  by  reason  of  the  passage 
of  this  act.  whether  a  suit  or  action  has  been  instituted  thereon  at 
the  time  of  the  taking  effect  of  this  act  or  not.  but  actions  may  be 
brought  upon  such  causes  in  the  same  manner,  under  the  same 
terms  and  conditions,  and  with  the  same  effect  as  though  said 
chapters  had  not  been  repealed. 

(c)  All  orders,  decisions,  rules  or  regulations  heretofore  made, 
issued  or  promulgated  by  the  commission  shall  continue  in  force 
and  have  the  same  effect  as  though  they  had  been  lawfully  made, 
issued  or  promulgated  under  the  provisions  of  this  act. 

(J)  This  act.  in  so  far  as  it  embraces  the  same  subject  matter, 
shall  be  construed  as  a  continuation  of  chapter  20  of  the  laws  of 
191 1,  approved  February  10.  191 1,  and  chapter  386  of  the  laws 
of   1911,  approved  April  6.   1911. 

Constitutionality. 

Sec.  84.     If  any  section,  subsection,  sentence,  clause  or  phrase  ^„consfi/u<ion- 
of  this  act  is   for   any   reason   held   to  be   unconstitutional,    wxkalityf  of  part  of 
decision  shall  not  affect  the  validity  of  the  remaining  portions  oiact  does  not 
thU  act     The  legislature  hereby  declares  that  it  would  have  passed^^^^^  °'^^  ^^^• 
this  act,  and  each  section,  subsection,  sentence,  clause  and  phrase 
thereof,  irrespective  of  the  fact  that  any  one  or  more  other  sections, 
subsections,  sentences,  clauses  or  phrases  be  declared  unconstitutional. 


All  previous 
orders  of 
Commission 
shall  continue 
in  force. 

This  act 
continuance  of 
Chap.  20. 
Larvsof  t9ff. 


^i  ■^.  V.^t 


<rs'^'&->**,  /-*' 


242 


LOUIS  SLOSS  &  CO. 


Interstate  Commerce. 

A.J         I       Sec.   85.      Neither  this  act  nor  any  provision  thereof,  except 

aJ^iXrZn  when  specifically  so  sUted.  shall  apply  or  be  construed  to  apply 

'^'t  inSe  to  commerce  with  foreign  nations  or  commerce  among  the  severid 

commerce  ,^^^  of  this  union,  except  in  so  far  as  the  same  may  be  permitted 

«*"P'  ^f  under  the  provUions  of  the  constitution  of  the  United  Sutes  and 

permitted,  ^^  ^^  ^^  ^^^^^^ 

Appropriation. 

Sec.  86.     All  moneys  which  are  paid  into  the  »tate  treasury  l^ 
oi  iTZuTd  the  commUsion  up  to  and  including  the  thirtieth  day  of  June     913 
Vcomm^ior^,  under  the  provisions  of  section  57  of  this  act.  and  -c^^^J^^^ 

Railroad  Commission  Fund,  are  hereby  appropnated.  to  be  used 
by  the  commission  m  carrying  out  the  provisions  of  this  act.  and 
the  controller  is  hereby  directed  to  draw  hi.  wan«it  on  said  fund 
from  time  to  time  in  favor  of  the  commission  for  the  amount, 
expended  under  its  direction,  and  the  treasurer  is  hereby  authorized 
and  directed  to  pay  the  same. 

Repeal. 
r,        ,   .     ,       Sec    87.    The  railroad  commission  act.  approved  February  10. 
^^IncoiS  1911.  and  the  act  entided  "An  act  to  amend  the  railroad  commis- 
^        ion  Jet  by  amending  section  fifteen  thereof  relating  to  powers  and 
duties  of  the  raUroad  commission  of  the  State  of  California    and 
to  amend  section  thirty-seven  thereof  relating  to  free  and  reduced- 
rate  transportation  for  freight  and  passengers,     approved  Apnl  6. 
1911.  and  all  acts  or  parts  of  acts  inconsistent  with  the  provision, 
of  this  act.  arc  hereby  repealed. 

Time  of  Effect. 

Public  Utility      s£c    88.     This  act  shall  take  effect  ninety  day.  after  Ae  final 
Mirch23'wlt  adjournment  of  thi.  session  of  the  legislature. 


Rules  of  Practice  and  Procedure 

Railroad  Commission  of  the 
State  of  California. 


Adopted    March    13.   1912. 
Elective    March   23.   1912. 


The  following  rules  of  practice  and  procedure  are  adopted  by  the 
Railroad  Commission  of  the  Slate  of  California  in  accordance  with 
die  provisions  of  Section  53  of  the  Public  Utilities  Act: 

RULE  I. 
Definitions. 

1.  The  term  "public  utility,"  when  used  in  diese  rules,  includes  Puhlic  Uiilify. 
tvtry    common    carrier,    pipe    line    corporation,    gas    corporation. 

electrical  corporation,  telephone  corporation,  telegraph  corporation, 
water  corporation,  wharfinger  and  warehouseman,  as  those  terms 
are  defined  in  Section  2  of  the  Public  Utilities  Act 

2.  The  term  "Commission."  when  used  in  these  rules,  means   CommLsioru 
the  Railroad  Commission  of  the  State  of  California. 

3      The  term  "formal  proceeding."  when  used  in  these  rule..   Formal 
mean,    a    proceeding    which    contemplates    a    hearing    before    the   proceeding. 
Commission  or  a  commissioner  sitting  in  a  judicial  or  quasi-judicial 
capacity.     A  formal  proceeding  may  be  either  (a)  a  complamt,  or 
(b)    an  application. 

4.     The  term  "complaint,"  when  used  in  these  rules,  means  a   Complamt. 
formal   proceeding,   whether  brought  upon   the  Commission's   own 
motion  or  upon  complaint  of  a  third  party,  having  for  its  object 
the  rendition  of  an  order  or  decision  which  can  be  enforced  by 
the  Commission. 


> 
t 


244 


LOUIS  SLOSS  &  CO. 


11 


Application.  5.  The  term  "application."  when  used  in  these  rules,  means  a 
formal  proceeding  brought  by  a  public  utility,  for  the  purpose  of 
securing  tlie  G>mmis8ion*s  authorization  or  permission  to  perform 
an  act 

F'mancial     6.    The  term  "financial  condition,"  when  used  in  these 

Condition.  nJcs  with  reference  to  an  application,  means  the  financial 

condition  of  the  applicant  as   shown  by   a   schedule   oi* 

schedules  annexed  to  the  petition  and  properly  referred  to 

therein,  and  showing: 

Siock^      (a)     Amount  and  kinds  of  stock  authorized. 

(t)     Amoimt  and  kinds  of  stock  issued  and  outstanding. 

Preferred      (c)    Terms  of  preference  of  all  preferred  stock,  whether 
Slock,  cumulative  or  participating,  or  on  dividends  or  assets,  or 
otherwise. 

Mortgage.  (J)  Brief  description  of  each  mortgage  upon  property 
of  the  applicant,  giving  date  of  execution,  name  of  mort- 
gagor, name  of  mortgagee  or  trustee,  amount  of  indebted- 
ness authorized  to  be  secured  thereby  and  amount  of  indebt- 
edness actually  secured. 

Bond  issues.  (0  Number  and  amount  of  bonds  authorized  and  issued, 
giving  name  of  the  public  utility  which  issued  the  same, 
describing  each  class  separately,  giving  date  of  issue,  par 
value,  rate  of  interest,  date  of  maturity  and  how  secured. 

Other  try-      (/)     Other  indebtedness,   giving  same  by  classes   and 
debtedness.  describing  security,  if  any,  with  a  brief  statement  of  the 
devolution  or  assumption  of  any  portion  of  such  indebted- 
ness upon  or  by  any  corporation  or  person,  if  the  original 
liability  has  been  transferred. 

Interest.  (g)  Amount  of  interest  paid  during  previous  fiscal  year 
and  rate  thereof,  with  amount  paid  at  each  rate,  if  different 
rates  wero  paid,  upon  each  issue  of  indebtedness. 

Dividends.  (h)  Rate  and  amount  of  dividends  paid  during  the  five 
previous  fiscal  years  and  the  amount  of  capital  stock  on 
which  dividends  were  paid  each  year. 


RULES  OF  PRACTICE  AND  PROCEDURE. 

(0     Detailed  statement  of  earnings  and  expenditures  for  Earning 
and  balance  sheet  showing  conditions  at  close  of  the  last  statements. 
fiscal  year,  unless  already  filed  with  the  conunission  as  part 
of  the  annual  report,  in  which  case  a  reference  to  the  filing 
should  be  given. 

RULE  II. 


245 


Office  in  San 
Francisco. 


Regular 
meetings. 

Sessions 
elsewhere. 

Sessions 
public. 


Sessions  of  Commission. 

The  office  of  the  Commission  shall  be  in  San  Francisco,  Cali- 
fornia, and  shall  always  be  open,  legal  holidays  and  non-judicial 
days  excepted.  The  regular  monthly  session  of  the  Commission 
shall  be  held  in  its  office  on  the  second  Tuesday  of  every  month, 
at  10:30  A.  M..  at  which  time  any  person  having  business  with 
the  Commission  may  appear  and  be  heard.  The  Commission  will 
hold  other  sessions  at  San  Francisco  and  elsewhere  m  the  State 
of  California  at  such  times  as  it  may  designate.  The  sessions  of 
the  Commission  shall  be  public. 

RULE  in. 

Information. 

The  Commission's  secretory  will,  upon  request,  advise  at  to  the  Secretary^  to  ad- 
form  of  complaint,  petition,   answer  or  other  documents  necesssury  vise  and  furnish 
to  be  filed  in  any  formal  proceeding,  and  furnish  such  information  information  to  the 
from  the  files  of  the  Commission  as  will  conduce  to  a  full  prescnta-  pMic. 
don  of  material  facts. 

RULE  IV. 

Formal  Proceedings-  -General  Matters  Applicable 

TO  All. 

1.  All  communications  should  be  addressed  to  **Railroad  Com-  Communications 
mission  of  the  State  of  California.  San  Francisco,  California.**  to  Commission. 

2.  The  secretary  shall  assign  to  each  formal  proceeding  a  num-  Cases  to 

ber  which  the  parties  shall,  before  filing,  place  on  all  subsequent  be  numbered. 
papers  in  such  proceeding. 


'. 


246 


LOUIS  SLOSS  &  CO. 


u 


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[R. 


Documents  to 
be  uniform. 

Lines  and 

pages  numbered. 

Pleadings  ma\f 

be  amended. 

Commission 
ma\f  issue 
subpoenas. 


Subpoenas  for 

production  of 

records. 


Personal 
service. 


Service   fcjj 

registered 

mail. 


Service  upon 
attorney. 

Orders,  etc., 

must   be 

in  writing. 

Cop]f  served 
upon  defendant. 


3.  All  pleadings  filed  with  the  Commission  in  fonnal  proceed- 
ings shall  be  printed  or  typewritten  on  one  side  of  the  paper  only, 
and,  as  far  as  practicable,  shall  be  upon  paper  SYz  x  1 3  inches  in 
size.     Each  line  and  page  shall  be  numbered. 

4.  The  Commission  may,  in  its  discretion,  allow  any  pleading 
to  be  amended  or  corrected  or  any  omission  therein  to  be  supplied. 

5.  Subpoenas  requiring  the  attendance  of  a  witness  from  any 
place  in  the  state  to  any  designated  place  of  hearing  for  the  purpose 
of  taking  the  testimony  of  such  witness  orally,  before  the  Commission 
or  one  or  more  commissioners  may  be  issued  by  any  commissioner 
or  the  secretary. 

Subpoenas  for  the  production  of  books,  accounts,  papers,  way- 
bills and  other  documents  (unless  issued  upon  the  Commission's 
own  motion)  will  only  be  issued  upon  application  in  writing  stating, 
as  nearly  as  possible,  the  books,  accounts,  papers,  waybills  or  other 
documents  desired  to  be  produced. 

6.  Personal  service  of  papers  in  all  hearings,  investigations  and 
formal  proceedings  pending  before   the  Commission  may  be  made 
upon  any  person  upon  whom  a  summons  may  be  served  in  accordance 
with  the  provisions  of  the  Code  of  CivU  Procedure  of  this  state. 
Service  may  also  be  made  by  mailing  in  a  sealed  envelope,  registered, 
with  postage  prepaid,  addressed  to  any  party  to  such  hearing,  inves- 
tigation   or    formal    proceeding   or    to   any   person   upon    whom    a 
summons  may  be  served  in  accordance  with  the  provisions  of  the 
Code  of  Civil   Procedure.      If  service  is  by  mailing,   and   an  act 
is  to  be  performed  within  a  specified  time  after  service,  the  lime  for 
the   performance   of   the   act  shall   begin   to  run   at   the   time   the 
registered   letter   is  received.      When   any   party   has   appeared  by 
attorney,  service  upon  the  attorney  will  be  deemed  proper  service 
upon  such  party. 

7.  Each  order,  authorization  or  certificate  made,  issued  or 
approved  by  the  Commission  shall  be  in  writing  and  shall  be  filed 
with  or  entered  on  the  records  of  the  Commission,  in  accordance 
with  the  provisions  of  the  Public  Utilities  Act,  and  a  copy  thereof, 
certified  by  the  secretary  under  the  seal  of  the  Commission,  shall 
be  served  upon  or  delivered  to  the  corporation  or  person  complained 
of,  or  the  applicant,  or  his  or  its  attorney. 


RULES  OF  PRACTICE  AND  PROCEDURE. 


247 


8.  In  any  formal  proceeding,  the  Commission  may  ptnmt  Interested  parties 
any  corporation,  association,  body  politic  or  person  to  intervene  ^^^ ' 
and  be  heard,  after  opportunity  has  been  given  to  the  party  or 
parties  to  such  proceeding  to  be  heard  on  such  intervention. 
Leave  thus  granted  shall  entitle  the  intervener  to  have  notice  of 
and  to  appear  at  the  taking  of  testimony,  to  produce  and  cross- 
examine  witnesses,  and  to  be  heard  in  person  or  by  counsel  on 
the  argument 

RULE  V. 

Complaints — Contents  and  Proceedings  Up  to 

Hearing. 

!.  Complaint  may  be  made  by  the  Commission  of  its  own  Complaints  shall 
motion  or  by  any  corporation  or  person,  chamber  of  commerce,  board  ^^  "^  Tvriiing. 
of  trade,  or  any  civic,  commercial,  mercantile,  traffic,  agricultural 
or  manufacturing  association  or  organization  or  any  body  politic  or 
municipal  corporation,  by  complaint  in  writing,  setting  forth  any 
act  or  thing  done  or  omitted  to  be  done  by  any  public  utility  in 
violation,  or  claimed  to  be  in  violation  of  any  provision  of  law  or 
of  any  order  or  rule  of  the  Commission. 

(a)     Any  public  utflity  shall  have  the  right  to   complain  on  Public   utilities 
any  of  the  grounds  upon  which  complaint  may  be  made  by  other  '"^^  ^^'"^  ^ 
parties. 

2.     Each  complaint  shall  show  the  venue,  "Before  the  Railroad  Form  of 
Commission   of    the    State   of    California,"    shaU    bear    a   heading'  <^omplamts. 
showing  the  name  of  the  complainant  and  the  name  of  the  defendant 
and  shall  state 

(a)     The  full  name  and  post-office  address  of  the  complainant 

(^)     The  full  name  and  post-office  address  of  the  defendant 

(c)  Fully,  clearly  and  with  reasonable  certainty  the  act  or 
thing  done  or  omitted  to  be  done,  of  which  complaint  is  made, 
with  a  reference,  where  possible,  to  the  law,  order  or  rule,  and 
the  section  or  sections  thereof,  of  which  a  violation  is  claimed. 

(i/)  Such  other  matters  or  facts,  if  any,  as  may  be  necessary 
to  acquamt  the  Commission  fully  with  the  details  of  the  alleged 
violation. 


1( 


!' 


248 


LOUIS  SLOSS  &  CO. 


RULES  OF  PRACTICE  AND  PROCEDURE. 


249 


r 


llj 


m 


un 


11'' 


HoTP  complaints 
must   be  signed. 


Who  must  sign 
complaints   as 
to  reasonable- 
ness of  rates. 


Copies  of 
Complaint. 


Mailed  to 
defendants. 

Answers  to 
complaints. 


3.  (a)  The  complaint  shall  be  «giicd  by  the  complainant  or 
his  attoraey,  if  any,  and  shall  show  the  name  and  posl-office  address 
of  such  attoraey  and  shall  be  verified.  Complaints  by  unincorpor- 
ated associations  may  be  verified  by  any  officer  or  director  thereof. 

(h)  Except  upon  its  own  motion,  the  Commission  will  entertain 
no  complaint  as  to  the  reasonableness  of  any  rates  or  charges  of 
any  gas,  electrical,  water  or  telephone  corporation,  other  than  a 
complaint  of  the  corporation  itself,  unless  the  same  be  signed  by  the 
mayor  or  the  president  or  chairman  of  the  board  of  trustees  or  a 
majority  of  the  council,  commission,  or  other  legislative  body  of 
the  city  and  county,  or  city  or  town,  if  any.  within  which  the 
alleged  violation  occurred,  or  not  less  than  twenty-five  consumers 
or  purchasers  or  prospective  consumers  or  purchasers  of  such  gas. 
electricity,  water  or  telephone  service. 

4.  At  the  time  complainant  files  his  original  complaint,  he  must 
also  file  copies  thereof  equal  in  number  to  one  more  than  twice  the 
number  of  corporations  or  persons  to  be  served. 

5.  Upon  the  filing  of  such  complaint,  the  Commission  shall 
immediately  mail  a  copy  thereof  to  the  defendant  or  defendante 
and  shall  also  examine  the  same  to  ascertain  whether  it  establishes 
a  prima  facie  case  and  conforms  to  those  rules.  At  any  time 
within  five  days  after  the  receipt  by  a  defendant  of  such  copy  of 
such  complaint,  he  may.  in  writing,  call  the  Commission's  attention 
to  any  defects  therein,  but  this  privilege  shall  not  in  any  wise,  unless 
the  Commission  specifically  so  orders,  extend  the  time  within  which 
such  defendant  is  required  to  satisfy  the  complaint  or  to  answer.  If 
the  Commission  is  of  the  opinion  that  the  complaint  docs  not 
establish  a  prima  facie  case  or  does  not  conform  to  these  rules,  it 
shall  notify  tfie  complainant  or  his  attoraey  to  that  effect,  and 
opportunity  may  be  given  to  amend  the  complaint  within  a  specified 
time.  If  the  complamt  is  not  so  amended  within  such  time  or  such 
extension  thereof  as  the  Conunission,  for  good  cause  sho%^.  may 
grant,  it  will  be  dismissed. 

If  the  Commission  is  of  the  opinion  that  such  complaint,  either 
as  originally  filed  or  as  amended  does  esUblish  a  prima  facie  case 
and  conform  to  these  rules,  the  Commission  shall  serve  upon  each 
corporation   or  person   complained   of,   an   order   under   the   hand 


of  iU  secretary  and  attested  by  its  seal,  accompanied  by  a  copy 
of  said  complaint,  directed  to  such  corporation  or  person  and 
requiring  that  the  matter  complained  of  be  satisfied,  or  that  the 
complaint  be  answered  in  writing  within  ten  days  from  the  date 
of  service  of  such  order,  provided  diat  Ae  Commission  may.  m 
particular  cases,  require  the  answer  to  be  filed  within  a  shorter  lime. 

6      If  the  defendant  desires  to  satisfy  the  complaint,  he  may  Settlement   with- 
submit  to  the  Commission,  within  the  time  allowed  for  satUfaction  out  a  hearmg. 
or  answer,  a  statement  of  the  relief  which  he  is  willing  to  give. 
On  the  acceptance  of  this  offer  by  the  complainant  and  tfie  approval 
of  the  Commission,  no  further  proceedings  need  be  taken. 

7.     If  satUfaction  be  not  made  as  aforesaid,  the  corporation  or  Procedure   when 
person  complained  of  must,  within  the  time  specified  in  the  order  comp/am/ « 
or  such  extension  thereof  as  the  Commission,  for  good  cause  shown, 
may  grant,  file  an  answer  to  the  complaint,  with  admission  of  service 
by  complainant  or  his  attoraey  endorsed  thereon,  or  an  affidavit  of 
service.     The  answer  must  contain  a  specific  denial  of  such  material 
allegations  of  the  complaint  as  are  controverted  by  the  defendant 
and  also  a  statement  of  any  new  matter  constituting  a  defense.     If 
the  answering  party  has  no  information  or  belief  upon  the  subject 
sufficient  to  enable  him  to  answer  an  allegation  of  the  complaint, 
he  may  so  state  in  his  answer  and  place  his  denial  upon  that  ground. 
The  filing  of  an  answer  will  not  be  deemed  an  admission  of  the 
sufficiency  of  the  petition,  but  a  motion  to  dismiss  may  be  made 
at  the  hearing. 

RULE  VI. 
Hearings  and  Rehearings — In  All  Formal  Proceedings. 

1 .     Except  as  otherwise  determined  in  specific  cases,  the  Com-  Classes  of  cases 
mission  wUl  grant  a  hearing  in  the  following  classes  of  cases:  h^arkg.^^  ^ 

(a)  When  an  order  to  satisfy  a  complaint  or  to  make  answer 
diereto  has  been  made  and  the  corporation  or  person  complained 
of  has  not  satisfied  the  cause  of  complaint.     (Rule  V.) 

(h)  When  an  application  has  been  made  tn  a  formal  pro- 
ceedmg. 


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Ten  day       2.      (a)      Notice  of  the  day  and  hour  of  a  hearing  shall  be 
notice  required,  ^^^j   ^^  j^^^j  ^^j,   j^y,  jj^f^^g  ^   ^^  ^^   therefor,   unless   the 

Commission  shall  find  that  public  necessity  requires  the  hearing  to 
be  held  at  an  earlier  date.  Hearings  shall  be  held  in  the  office 
of  the  Commission  in  San  Francisco  unless  elsewhere  specified  in 
the  notice. 

Formal  (b)  In  formal  applications,  the  Commission  may.  m  its 
applications,  discretion,  give  all  other  corporations  or  persons  who  may  be 
atfected  thereby  an  opportunity  to  be  heard,  either  by  service  upon 
them  of  a  copy  of  the  petition  or  by  publication  of  the  substance 
thereof,  at  the  expense  of  the  applicant,  for  such  length  of  time 
and  in  such  newspaper  or  newspapers  as  the  Commission  may 
designate.  In  such  cases,  the  form  of  the  notice  must  be  submitted 
to  the  secretary  of  the  Commission  for  approval,  and  proof  of  the 
publication  thereof  must  be  filed  with  the  secretary  at  or  before 
the  hearing. 

'Agreements  as  3.  The  parties  to  any  proceeding  or  investigation  before  the 
to  facts.  Commission  may.  by  stipulation  in  writing  filed  with  the  Commission 
or  entered  in  the  record,  agree  upon  the  facts  or  any  portion  thereof 
involved  in  the  controversy,  which  stipulation  shall  be  regarded 
and  used  as  evidence  at  the  hearing.  It  is  desirable  that  the  facts 
be  thus  agreed  upon  whenever  practicable.  The  Commission  may 
in  such  cases  require  such  additional  evidence  as  it  may  deem 
necessary. 

Examination      4.      (a)     Witnesses  will  be  examined  orally  and  under  oath 
of  witnesses.  Ij^fore    the    Commission    or    a    conmiissioner    unless    the    facts    are 
stipulated  or  the  Commission  or  commissioner  otherwise  orders. 

Complainant  (h)  The  complainant  must  establish  the  facts  upon  which  he 
must  establish  y^^^^^  j^jj  complaint,  unless  the  defendant  admits  the  same  or  fails 
*  '  to  answer  the  complaint  The  defendant  must  likewise  give  evidence 
of  the  facts  alleged  in  the  answer,  unless  admitted  by  the 
complainant,  and  must  fully  disclose  its  defense  at  the  hearing.  In 
case  of  failure  to  answer,  the  Commission  will  take  such  proof  of 
die  facts  as  may  be  deemed  proper  and  reasonable  and  make  such 
order  thereon  as  the  circumstances  of  the  case  may  require. 

Documentary       (c)      If   documentary   evidence   is  offered,   the   Commission,   in 
evidence.  ^^  ^j  requiring  the  originals  to  be  filed,  may,  in  its  discretion. 


RULES  OF  PRACTICE  AND  PROCEDURE. 


251 


accept  certified  or  otherwise  authenticated  copies  of  such  documents 
or  of  such  portions  of  the  same  as  may  be  relevant;  or  may  require 
such  evidence  to  be  transcribed  as  part  of  the  record. 

5.  Hearings  may  be  adjourned  from  time  to  time  by  or  at  the  Hearings  may 
...        ,    ,     ^  •   : ^,  be  adjourned. 

direction  of  the  Commission  or  a  commissioner. 

6.  The  Commission   or   a  commissioner  may   require  the   sub-  Submission 
.   .        f  ,   .  r  of  briefs. 

mission  or  bners. 

7.  The  Commission  may  at  any  time,  of  its  own  motion,  make  Imestigation  by 
investigations  and  order  hearings  into  any  act  or  thing  done  or  omitted  ^^J^l'^''^"^^^^^ 
to  be  done  by  any  public  utility  which  the  Commission  may  believe  is 

in  violation  of  any  provision  of  law  or  of  any  order  or  rule  of  the 
Commission.  It  may  also,  through  its  own  experts  or  employees,  or 
otherwise,  secure  such  evidence  as  it  may  consider  necessary  or 
desirable  in  any  formal  proceeding  in  addition  to  die  evidence 
presented  by  the  parties. 

8.  Any   party   to    a    formal    proceeding   or    any    stockholder  Ariy  security 
or  bondholder  or  other  party  pecuniarily  interested  in   the  public  ^^^'J^''^^^''^ 
utility    affected    may    apply    for    a    rehearing    as    to   any    matters  ^^^f^^^j-^j^g 
determined   by    the   Commission    and    specified    in    die    application 

for  the  rehearing,  and  the  Commission  may  grant  and  hold 
such  rehearing  on  said  matters,  if  in  its  judgment  sufficient  reason 
dierefor  be  made  to  appear.  Such  application  shall  set  fordi 
specifically  the  ground  or  grounds  on  which  die  applicant  considers 
die  Commission's  decision  or  order  to  be  unlawful  or  erroneous. 
Rehearings  must  be  asked  for  before  die  effective  date  of  die 
decision  or  order  complained  of.  In  further  respects,  rehearings 
will  be  governed  by  the  provisions  of  Section  66  of  the  Public 
Utilities  Act 

RULE  VII.  Complaint  for 

^  ^  installation  of 

Switch  Connections  and  Spurs— Complaints  for.       ^^.^^^  ^^^^ 

,     ,       ,      .       11    .         e  -^  L  show  amount 

When  complaint  is  made  for  die  mstallaUon  of  a  switch  con-  ^^  business, 

nection  or  spur,  under  the  provisions  of  Section  39  of  die  Public  length  of  track 

Utilities  Act  required. 


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1.  The  complaint,  in  addition  to  the  requirements  of  Rule 
V.2,  mutt  state: 

(a)  Character  and  amount  of  business  which  will  probably 
be  tendered  at  such  connection  or  spur. 

(b)  Length  of  track  necessary  to  be  built  by  defendant  an<f 
the  cost  of  the  same. 

2.  With  the  complaint  shall  be  filed: 

Map  m        (fl)      Map  on  scale  of  not  less  than  100  feet  per  inch*  showing 

p  tea  e.  Jq^^oq  Qf  existing  tracks ;  property  lines ;  buildings  and  structures 

in  the  vicinity;    and  the  location  and  length  of  the  proposed  switch 

connection  or  spur.     Such  map  should  be  filed  in  triplicate;    one 

copy  shall  be  on  tracing  linen  unless  waived  by  the  Commission. 

RULE  VIII. 

Value  of  Property  of  Pubuc  Utilities. 

rhjfsicaj  valu-  Formal  proceedings  instituted  by  the  Commission  to  ascertain 
.  J  ^  ki  ^^  value  of  the  property  of  a  public  utility  shall  be  conducted  aa 
utilities,  sp^ificci  in  Section  70  of  the  Public  Utilities  Act.  Whenever  m 
any  formal  proceeding  the  value  of  the  property  or  a  portion  thereof 
of  a  public  utility  becomes  relevant  and  pertinent,  the  Commission 
may,  through  its  own  experts  and  employees,  or  otherwise,  investigate 
and  ascertain  such  value. 

RULE  IX. 
Applications — General  Matters  Applicable  to  All. 

1.  All  formal  applications  must  be  by  petition  in  writing,  signed 
by  the  applicant  and  duly  verified.  The  petition  must  set  forth  the 
full  name  and  post-office  address  of  the  applicant  and  must  show 
the  full  name  and  address  of  its  attorney,  if  any,  and  must  contain 
the  facts  on  which  the  application  is  based,  with  a  request  for  the 
order,  authorization,  pennission  or  certificate  desired  and  a  reference 
to  the  particular  provision  of  law  requiring  or  providing  for  the  same. 
Three  copies  of  the  petition  shall  be  filed  with  the  original  except 
in  applications  covered  by  Rules  XVII,  XVIII,  XIX  and  XX« 
in  which  cases  the  original  petition  alone  need  be  filed. 


RULES  OF  PRACTICE  AND  PROCEDURE. 


253 


The  petition  must  contain  such  further  statements  as  may  be 
required  by  any  provision  of  law  or  of  these  rules  and  must  show 
in  detail  compliance  therewith. 

If  the  applicant  is  a  corporation,  there  must  be  annexed  to  the  Information  ft- 
petition  a  certified  or  verified  copy  of  its  articles  of  incorporation  quired  mih  formal 
or    charter    and    all    amendments    thereof,    except    in    applications  applicaUom, 
covered  by  Rules  XVII,  XVIII,  XIX  and  XX.      If  maps  or 
profiles  are  filed  with  the  petition,   they  must  always  be   filed  in 
triplicate  and  one  copy  thereof  shall  be  on  tracing  linen. 

2.  Whenever  under  these  rules  any  map,  profile,  certificate,  state- 
ment or  other  document  is  required  to  be  filed  with  a  petition  and 
the  same  has  therefore  been  filed  with  the  Conunission,  the  petition 
may  state  the  fact  of  such  filing  with  the  date  and  the  proceeding 
m  which  or  occasion  on  which  the  filing  was  made. 


y.  Upon  the  filing  of  such  petition,  the  Commission  shall  exam- 
ine the  same  to  see  whether  it  establishes  a  prima  facie  case  for 
action  on  the  part  of  the  Commission  and  conforms  to  these  rules. 
If  the  petition  fails  in  cither  of  these  respects,  the  Commission  will 
give  notice  of  the  defects  to  the  applicant,  who  may  correct  the  same. 
If  the  petition  be  found  to  state  a  prima  facie  case  and  to  comply 
with  the  rules,  the  Commission  may  make  an  order  ex  parte  granting 
the  application  or  will  appoint  a  time  and  place  for  a  hearing  on 
the  same,  provided  that  a  hearing  shall  always  be  held  when 
provided  for  in  the  Public  Utilities  Act 


Corporate  ap- 
plicants must 
file  articles  of 
incorporation,  etc 

Correction  of 
applications. 


RULE  X 

Railroad    Crossings — ^Applications    for    Construction, 
Alteration  or  Abolition  of. 

When    application   is   made    for   the    construction,    alteration   or  Additional 
abolition  of  crossings   (I)   of  public  roads,  highways  or  streets  by  information 
railroads,  or  (2)  of  railroads  by  public  roads,  highways  or  streets.  ^^^"lJ^f^'^^ 
or   (3)    of  raUroads  by   railroads,  or    (4)    of  railroads  by  street  ^gj^^jing" 
railroads,  or  (5)  of  street  railroads  by  railroads,  or  (6)  of  public  railroad  crossings, 
roads  or  highways  by  street  railroads,  or   (7)   of  street  railroads 
by  public  roads  or  highways,  under  the  provisions  of  Section  43  of 
the  Public  Utilities  Act, 


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1.  The  petidoD,  in  addition  to  the  requirements  of  Rule  IX, 
must  state: 

Estimates       (a)      If  ^^  application  is  for  a  crossing  at  grade,  such  facts, 
of  cost,  data  and  estimates  of  cost  as  tend  to  show  that  it  is  not  reasonable 
or  practicable  to  etfect  a  separation  of  grades. 

Safefy       (b)     Such   safety   device   or  other  protection,   if   any,    as   the 
devices,  applicant  may  believe  should  be  installed,  with  detailed  information 
concerning  the  same. 

2.  With  the  petition  shall  be  filed: 

Map.  (a)  Map  on  scale  of  not  less  than  200  feet  per  mch  showing 
accurately  the  location  of  all  tracks,  buildmgs,  structures,  property 
lines,  streets  and  roads  in  the  vicinity  of  the  proposed  crossing. 

Profile  maps.  (h)  Profiles  showing  ground  Imes  and  proposed  grade  lines 
of  approaches  on  such  public  roads,  highways  or  streets,  railroads 
or  street  railroads  as  may  be  atfected  by  the  proposed  crossmg. 
In  case  of  a  contemplated  crossing  of  a  railroad  by  a  railroad,  the 
profile  of  each  railroad  shall  show  the  customary  information  for 
not  less  than  one  ( 1 )  mile  on  each  side  of  the  proposed  crossing. 

RULE  XI. 

Safety  Devices  at  Railroad  Crossings — 
Applications  for. 


Information  re- 
quired as  to 
safety  devices. 


Description  and 
cost  of  device. 

Number  of 

trains  using 

crossing. 


Whenever  a  railroad  or  street  railroad  desires  to  protect  any 
crossing  which  it  may  have  at  grade  with  another  railroad  or  strael 
railroad,  witli  an  interlocking  or  other  safety  device,  it  may  make 
application  to  the  Commission  for  an  order  approving  such  device 
and  directing  its  construction  and  also  prescribing  the  division  of 
the  cost  of  construction,  maintenance  and  operation  of  the  same. 

L  The  petition,  in  addition  to  the  requirements  of  Rule  IX, 
must  state: 

(a)  The  kind  of  device  proposed,  with  a  description  thereof 
and  an  estimate  of  the  cost  of  its  construction  and  operation. 

(b)  The  average  number  of  trains  of  each  class,  and  of  cars 
in  case  of  street  railroads,  operated  daily  over  the  crossing  by  each 
railroad  over  a  period  of  not  less  than  thirty   (30)   days. 


2.     With  the  petition  shall  be  filed: 

(a)  Map    on    scale    of    not    less    than    100    feet    per    inch,  i^^p^^ 
showing  the  location  of  main   tracks,   the  length   and  location  of 

all  switches,  sidings  and  spur  tracks,  all  buildings  and  obstructions 
to  the  view  in  the  vicinity,  the  proposed  location  of  tower,  if  any, 
and  the  proposed  location  of  all  derails,  switches,  signals  and 
detector  bars,  which  are  proposed  to  be  operated  by  the  device. 

(b)  A  profile  of  each  railroad  or  street  railroad  showing  the  Profiles. 
customary   information   for  not   less   than   one    ( 1 )    mile   on   each 

side  of  the  crossing,  in  case  of  railroads,  and  not  less  than  1000 
feet  in  case  of  street  railroads. 

(c)  Copies  of  such  contracts  or  agreements,  if  any,   as  may  QqpIqs  of 
have  been  entered  into  relating  to  the  construction  or  protection  of  agreements. 
the  crossing. 

RULE  XII. 


Information  re- 
quired  with 
applications  for 
new  constructiom 


New  Construction   or  Extensions — ^Applications   for. 

When  application  is  made  by  a  street  railroad  corporation,  gas 
corporation,  electrical  corporation,  telephone  corporation  or  water 
corporation  for  a  certificate  that  the  present  or  future  public 
convenience  or  necessity  require  or  will  require  a  proposed  new 
construction  or  an  extension  in  the  cases  specified  in  Section  30a 
of  the  Public  Utilities  Act, 

I.  The  petition,  m  addition  to  the  requirements  of  Rule  IX, 
must  state: 

(a)  The  proposed  location,  route  or  routes,  the  method  of 
construction,  and  the  names  of  all  public  utility  corporations  or 
persons  with  whom  the  proposed  new  construction  or  extension  is 
likely  to  compete. 

(b)  The  facts  showing  that  the  proposed  new  construction  or  Necessity^. 
extension  is  or  will  be  required  by  public  convenience  and  necessity. 

(c)  The  manner,  in  detail,  in  which  it  is  proposed  to  finance 
the  proposed  new  construction  or  extension. 


Location. 

Method  of 
construction. 


Method  of 
financing. 


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257 


2.     With  Ac  petition  shall  be  filed: 
Maps.       (a)     Map  to  suitable  scale  showing  the  location  or  route  of  the 
proposed   new   construction   or  extension   with   its  relation  to  other 
public  utilities  with  which  the  same  is  likely  to  compete,  which  map 
shall  contain  all  data  necessary   for   a  complete  understanding  of 
the  situation. 
Certified       (h)     When  the  consent,  franchise  or  permit  of  a  county,  city 
copies  of  and   county,    municipal   or   other   public   authority   is   necessary,    a 
franchises,  certified  copy  of  the  application  tfierefor  and  of  the  ordinance  or 
other  document  granting  such  consent,   franchise  or  permit.     If  it 
is  impossible  to  file  a  copy  of  the  application,  the  facts  rendering 
such  filing  impossible  shall  be  stated. 

RULE  XIII. 
Franchises  and  Permits— Applications  for  Permission 

TO   ElXERCISE. 


Informaiton  re- 
quired r»ith 
applications  to 
exercise  fran- 
chises and 
permits. 


Financial 
condition. 

Franchise 
proceedings. 


Reasons  for 
delay  in 
exercise. 


When  application  is  made  by  a  street  railroad  corporation,  gas 
corporation,  electrical  corporation,  telephone  corporation  or  water 
corporation  for  a  certificate  that  public  convenience  and  necesMty 
require  the  exercise  of  a  right  or  privilege  under  a  franchise  of 
permit,  in  the  cases  specified  in  Section  30b  of  the  Public  Utilities 
Act 

L  The  petition,  in  addition  to  the  requirements  of  Rule  IX 
must  state: 

(a)  The  financial  condition  of  the  applicant  as  defined  in 
Rule  I.  6. 

(b)  The  facts  showing  the  proceedings  theretofore  taken  wiA 
reference  to  franchise  or  permit  for  which  permission  and  approval 
are  sought 

(c)  If  the  application  is  for  permission  to  exercise  a  right  or 
privilege  under  any  franchise  or  permit  granted  prior  to  March 
23,  1912,  but  not  theretofore  exercised,  or  the  exercise  of  whicK 
has'  been  suspended  for  more  than  one  year,  the  reason  why  such 
right  or  privilege  has  not  been  exercised  or  has  been  suspended. 


(d)     The   facts   showing   that    the   exercise   of   such    right   or  Necessity, 
privilege  under  such  franchise  or  permit  is  required  by  the  public 
convenience  and  necessity. 

2.     With  the  petition  shall  be  filed: 

(a)      A  certified  copy  of  the  written  application  to  the  proper  Copy  of 
county,  city  and  county,  municipal  or  other  public  authority   for  '^^fj^l'''^ 
its   consent,    franchise   or   permit   and   of   the   ordinance   or   other  ^^^ll^^•^l^ 
document,  if  any  has  been  secured,  granting  such  consent,  franchise 
or  permit.     If  it  is  impossible  to  file  a  copy  of  the  application,  the 
facts  rendering  such  filing  impossible  shall  be  stated. 

(h)     Map  10  suitable  scale  showing  the  streets,   avenues   and  Map. 
all   other  places   and  property   in  or   upon  or   along  which  it  is 
proposed  to  exercise  such  franchise  or  permit. 

3      If  a  public  utility  desires  to  exercise  a  right  or  privilege  Preliminary  order 
under   a   franchise   or  permit   which   it   contemplat^   securing,   but  rj.^^^^^^^^^^^^^ 
which  has  not  as  yet  been  granted  to  it  such  public  utihty  may  ^^^„^^.^^ 
apply   to   the   Commission    for   an   order   prelimmary   to    the   issue 
of  the  certificate.     The  Commission  will,  in  its  discretion,  thereupon 
make   an   order   declaring   that  it  wUl   thereafter   upon   application 
inue  the  desired  certificate,  upon  such  terms  and  conditions  as  it 
may  designate  after  the  public  utility  has  obtained  the  contemplated 
franchise   or   permit      Upon    the   presentation   to   the   Commission 
of   evidence   satisfactory   to  it   that  such   franchise   or  permit   has 
been  secured  by  such  public  utility,  the  Commission  will  thereupon 
issue  such  certificate. 

RULE  XIV. 

Sale,  Lease,  Assignment,  Mortgage  or  Other 
Disposition  of  Property— Application  for. 

When    application   is   made   by    a    railroad    corporation,    street  Information  re- 
railroad  corporation,  pipe  line  corporation,  gas  corporation,  electrical  l^f^'J.^^^^^^ 
corporation,   telephone  corporation,   telegraph   corporation  or  water  ^.^^^^.^^  ^^ 
corporation   for   an   order   authorizing   the   sale,   lease,   assignment  property, 
mortgage  or   other   disposition   of   the  whole   or   any   part   of   its 
railroad,  street  railroad,  line,  plant  or  system,  necessary  or  useful 


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LOUIS  SLOSS  &  CO. 


in  the  pcrfonnancc  of  its  duties  to  the  public,  or  any  franchite  oi 
pennit  or  any  right  thereunder,  or  by  any  means  whatsoever,  direct 
or  indirect,  the  merger  or  consolidation  of  iU  property,  franchises 
or  pcrmiU  or  any  part  thereof,  with  any  other  public  utility,  in 
the  cases  specified  in  Section  5 1  a  of  the  Public  Utilities  Act 

I .     The  petition  must  be  made  by  all  the  parties  to  the  proposed 
transaction  and,  m  addition  to  the  requiremenU  of  Rule  IX.  must 
state: 
Financial       (a)     The  financial  condition  of  each  applicant,  as  defined  in 
condition.  Rule  I,  6. 

Detailed       (b)     In  detail  die  reasons  upon  the  part  of  each  applicant  for 

reasons  for  entering    into   the    proposed    sale,    lease,    assignment,    mortgage    or 

disposal  ^„  disposition  of  such  property,  franchise  or  permit  and  all  the 

facU  wananting  the  same  and  showing  that  it  is  for  the  benefit 

of  the  public  service. 

2.     With  the  petition  shall  be  filed: 

Copies  of       (a)     A  copy   of   the  proposed   contract,    agreement,    lease   or 

agreements,  mortgage,   and  if  prior  agreements  have  been  made  between   the 

parties  relating  to  the  same  subject  matter,  copies  of  such  agree- 

menU  must  be  filed  with  the  petition  or  referred  to  as  already  on 

file  with  the  Gunmission. 

RULE  XV. 

Acquisition  of  Part  or  All  Capital  Stock  of  Another 

Utiuty — ^Applications  for. 


Information  re- 
quired Tvith 
applications  to 
purchase 
property. 


Financial 
condition. 


When  application  is  made  by  any  public  utility  for  authorization 
to  purchase  or  acquire,  toke  or  hold  any  part  of  the  capital  stock 
of  any  other  public  utility,  under  the  provisions  of  Section  51b 
of  the  Public  Utilities  Act, 

1.  The  petition  must  be  made  by  the  public  utility  proposing 
to  purchase,  acquire,  take  or  hold  the  stock,  and  in  addition  to  the 
requirements  of  Rule  IX,  must  state: 

(a)  The  financial  condition  of  the  applicant  and  of  the 
corporation  whose  stock  is  sought  to  be  purchased,  acquired,  taken 
or  held,  as  defined  in  Rule  I.  6. 


RULES  OF  PRACTICE  AND  PROCEDURE. 


259 


(h)     The  reasons  why  the  applicant  desires  to  secure  Ae  stock.  Reasons  for 

and  the  amount  of  the  stock  of  the  pubUc  utUity  atfectcd  already  purchase. 
owned  or  held  by  applicant,  if  any. 

(c)      Price  proposed  to  be  paid   for  the  stock,   die  terms  of  ^"^^  J^^^^/^  ^^ 

payment  with  the  market  value  thereof,  the  highest  and  lowest  price  P^^V"^^"  *  «  ^• 
during  the  period  of   at  least  one  year  prior  to  the  application, 
and  dividends,  if  any.  paid  for  a  period  of  five  years. 

RULE  XVL 

Stocks.    Bonds.    Notes   and   Other   Evidences   of 

Indebtedness — ^Applications  for  Order 

Authorizing  Issue  of. 

When  application  is  made  by  any  public  utflity  for  an  order  ^^f.^'J^^^^lf^  '^' 
authorizing  the  issue  of  stock  or  stock  certificates,  or  bonds,  notes  ^^J^'^^.^^^-j^  ^^ 
or  other  evidences  of  indebtedness  payable  at  periods  of  not  more    .^^^   securities. 
than   twelve  months   after   the   date   thereof,   under   the  provisions 
of  Section  52  of  the  Public  Utilities  Act, 

1.     The  petition,  in  addition  to  the  requirements  of  Rule  IX, 
shall  state: 

(a)     The   financial   condition   of   the   applicant   as   defined   m  Phpical  con- 
Rule  I.  6  and  a  description  of  the  railroad,  street  railroad,  line.   ^'^'°?J^^^ 
plant  or  system,  and  equipment  of  the  applicant,  with  the  original   ^PP  ^^"  ' 
cost,  where  possible,  and  its  cost  to  the  applicant,  and  the  amount 
of  its  stock  held  by  other  corporations  and  their  names,  and  the 
kind  of  stock  held  by  each.     If  it  is  impossible  to  state  the  original 
cost,   the  facts  creating  such  impossibility  shall  be  sUted. 

(h)     The  amount  and  kind  of  stock,  if  any.  which  the  public   ^,^^^^^  «"^ 
utility  desires  to  issue,  and.  if  preferred,  the  nature  and  extent  of   J^^^/^^'^'j"^" 
the   preference:     the   amount   of   bonds,    notes   or   other   evidences 
of  indebtedness,  if  any.  which  the  public  utility  desires  to  issue, 
with  terms,  rate  of  interest,  and  whether  and  how  to  be  secured. 

(c)     The  use  to  which  the  capital  to  be  secured  by  the  Usuc   Use  to  which 
of  such  stock  or  stock  certificates,  or  bonds,  notes  or  other  evidences  l[''''^^^^^^J^ 
of   indebtedness   is   to  be   put.    with   a   definite   sUtemcnt   of   how 
much  is  to  be  used  severally  for  the  acquisition  of  property,  the 


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260 


LOUIS  SLOSS  fcCg. 


Description  of 

property  to 

he  required. 


Copies  of 
all  contracts. 


Detailed  irh- 
formation  re- 
garding capital- 
ization of  right 
to  be  a  corpora- 
tion, etc. 


Statement  of 

financial   conr 

dition  required 

in  case  of 

merger. 


constnicdon.  complctioii.  extension  or  improvement  of  facilities,  the 
improvement  of  service,  the  maintenance  of  service,  the  discharge 
or  refunding  of  obligations,  and  the  reimbursement  of  moneys 
actually  expended  from  income  or  from  any  other  moneys  in  the 
treasury  as  provided  by  Section  52  of  the  Public  Utilities  Act. 

(d)     The  property  in  detail  which  is  to  be  acquired.  wiA  ilt 
value,    a    detailed    description    of    the    contemplated    construction, 
completion,    extension    or    improvement    of    facilities    set    forth    in 
such  a  manner  that  an  estimate  of  cost  may  be  made,  a  statement 
of  the  character  of  the  improvement  of  service  proposed,   and  of 
the  reasons  why  the  service  should  be  maintained  from  its  capitol. 
If  it  is  proposed  to  discharge  or  refund  obligations  or  to  reimburse 
moneys  actually  expended,  a  statement  of  the  nature  and  description 
of   such  obligations  and  expenditures,   including   the  par  value  of 
the  obligations  and  the  amount  for  which  they  were  actually  sold 
and  the  application  of  the  proceeds  and  of  the  moneys  expended, 
showing  when,  lo  whom  and  for  what  paid  or  applied. 

(e)  Whether  any  contracts  have  been  made  for  the  acquisition 
of  such  property,  or  for  such  construction,  completion,  extension  or 
improvement  of  facUities,  or  for  the  reimbursement  of  expenditures, 
or  for  the  disposition  of  any  of  the  stock  or  stock  certificates,  or 
bonds,  notes  or  other  evidences  of  indebtedness  which  it  U  proposed 
to  issue  or  the  proceeds  thereof  and  if  any  such  contracte  have 
been  made,  copies  thereof  shall  be  annexed  to  the  petition. 

(/)  Whether  any  of  the  outstanding  stock  or  stock  certificates 
or  bonds,  notes  or  other  evidences  of  indebtedness  of  the  public 
utility  have  been  issued  or  used  in  capitalizing  the  right  to  be  a 
corporation,  or  any  franchise  or  permit,  or  the  right  to  own. 
operate  or  enjoy  any  such  franchise  or  permit,  or  any  contract  for 
consolidation  or  lease,  and  if  so,  the  amount  thereof  and  the 
franchise,  rirfit,  contract  or  lease  so  capitalized. 

(g)  If  the  stock  or  stock  certificates  arc  to  be  issued  by  a 
corporation  formed  by  the  merger  or  consolidation  of  two  or  more 
corporations,  the  petition  shall  contain  a  complete  sUtemcnt  of 
the  financial  condition  of  the  corporations  so  to  be  merged  or 
consolidated  of  the  kind  required  by  subdivision  (a)  herembefore 
tet  forth,  and  of  their  capital  stock  at  the  par  value  thereof. 


RULES  OF  PRACTICE  AND  PROCEDURE. 


261 


(h)     Such  other  facts  as  may  be  pertinent  to  the  application.  Other  pertinent 

facts. 


Records  which 
must  he  filed 
mth  petition. 

Proceedings 
authorizing  issae 
of  securities. 

Certified  list  of 
stockholders. 


2.     With  the  petition  must  be  filed: 

(fl)  A  certificate  or  proposed  certificate  of  proceedings  at  the 
meeting  of  directors  and  stockholders  authorizing  the  issue  of  tha 
desired  securities  with  a  copy  of  the  mortgage,  if  any. 

(h)  A  certified  list  of  the  certificates  of  stock  ahready  ou^- 
standing,  with  the  shares  of  stock  represented  by  each  certificate, 
and  the  amounts  paid  to  the  public  utility  on  each  certificate  as 
originally  issued,  either  in  money,  labor  or  property,  slatmg  the 
amount  of  each. 

(c)      Maps,  profiles,  plans  and  plats  of  proposed  ptapaty  and  Maps. 
construction  showing — 

1.  In    Ae    case    of    railroads,    including    street    railroads,    all  Information 
information  required  by  the  Commission's  General  Order  No.   14.  ^^^j. 

2.  In   the   case   of   other   public   utilities,   such   certified   maps'  \iaps  of  prop- 
and  plans  as  will  indicate  to  the  Commission  the  property  to  he  ert\f  to  he 
acquired   and  the  location,   extent  and  character  of   the  proposed  acquired. 
construction. 

{d)     Original   deeds   of  property,   or   certified   copies   thereof.  Copies  of 
covered  by  proposed  issue,  with  a  detailed  sUtement  of  ito  actual  deeds. 
cost 


(c)      Certified  copies    of    all    contracts    for   the    acquisition    of 

proposed  property  and  equipment  and  for  construction,  with  plans 

and   specifications  of   such   buildings   and   structures   as   may   have 
been  designed. 

(/)  Complete  inventory  of  all  property  and  equipment  proposed 
to  be  acquired,  prepared  upon  or  in  accordance  with  blank  forms 
and  specifications  prescribed  by  die  Commission,  and  a  statement 
of  the  cost  thereof. 

(g)  A  certified  statement  of  all  cash  bonuses  and  otfier 
donations  of  property  received,  if  any. 

3.  If  Ae  application  is  granted,  in  whole  or  in  part,  the 
Commission's  order  will: 


Copies  of 
contracts. 


Inventories  of 
property^. 

Statement  of 

honuses. 

The  Commissions 

order  if  granted 

i»ill  prescribe 

/loip  proceeds 

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LOUIS  SLOSS  &  CO. 


Require  report 
terms  and  con- 
ditions of  sales 
of  securities. 

Require  report 

showing   use 

of  moneys. 


Specify  other 
conditions. 


(a)  Prescribe  the  purposes  and  amounts  for  which  the  issue 
authorized  or  the  proceeds  thereof  may  be  used. 

(b)  Direct  the  applicant  to  report  under  oath  the  sale  or  sales 
of  the  securities  or  obligations  authorized,  the  terms  and  conditions 
of  sale  and  the  amounts  realized  therefrom. 

(c)  Require  the  applicant  to  make  a  verified  report  at  least 
every  six  months  showing  in  detail  the  use  and  application  by  it 
of  the  moneys  so  realized  until  such  moneys  shall  have  been  fully 
expended. 

(J)  Specify  such  condition  or  conditions  and  prescribe  such 
terms  as  the  G>mmission  may  deem  reasonable  and  necessary  to 
the  exercise  of  its  permission. 

RULE  XVII. 

Increases  in  Charges — ^Applications  for  Permission 

TO  Make. 

Information  re-        When  application  is  made  by  any  public  utility  to  raise  any 

quired  with  ap-    rate,   fare,  toll,  rental  or  charge  or  so  to  alter  any  classification, 

plication  to    contract,  practice,  rule  or  regulation  as  to  result  in  an  increase  in 

increase  charges.    ^^  ^^^^^  f^^^^  ^^jj^  rtnial  or  charge,  under  the  provisions  of  Section 

20  of  Article  XII  of  the  Constitution  of  this  State  or  Section  63a 
of  the  Public  Utilities  Act 

1.  The  petition,  in  addition  to  the  requirements  of  Rule  IX, 
must  state: 

Statement  of        (a)     The  rates,   fares,   tolls,   rentals  or  charges  in  etfect  and 
present   rates,    the  increases  which  it  is  desired  to  make.     These  allegations  may 
be  made  by  reference  to  schedules  accompanying  the  petition. 

Reasons  for        (h)     The  reasons  for  the  mcrease,  to  be  stated  in  full,  so  diat 
increase,    the  Commission  may  clearly  see  the  justification  therefor. 

2.  With  the  petition  must  be  filed: 

Schedules        M     Such    schedules   or    data,    if    any,    as    the    Commission*! 
or  data,   tariff  circulars  or  other  applicable  orders  may,  from  time  to  time, 
specify. 


RULES  OF  PRACTICE  AND  PROCEDURE. 


£6f 


3.     If  the  Commission  is  satisfied  with  the  showing,  so  made.  Action  of 
it  may  take  action  on  the  application  ex  parte:    otherwise  it  may  CommissioTL 
order  a  hearing  and  give  notice  thereof   to  such   corporations  or 
persons  as  it  may  consider  necessary  or  desirable. 

RULE  XVIII. 

Long    and    Short    Haul    Rule:     Thirty-Day    Notice 
Rule — Applications  for  Relief  from. 


Information 
required  Tvith 
applications 
relating  to  long 
and  short  haul. 


When  application  is  made  by  a  common  carrier  for  authorization 
to  charge  less  for  a  longer  than  a  shorter  haul  over  the  same 
line  or  route  in  the  same  direction,  under  the  provisions  of  Section 
21  of  Article  XII  of  the  Constitution  of  this  State  or  of  Section 
24a  of  the  Public  Utilities  Act  or  by  a  telegraph  or  telephone 
corporation  for  authorization  to  charge  less  for  a  longer  than  for 
a  shorter  distance  service  for  the  transmission  of  messages  or 
conversations  over  the  same  line  or  route  in  the  same  direction, 
under  the  provisions  of  Section  24b  of  the  Public  Utilities  Act, 
or  by  any  public  utility  to  change  a  rate,  fare,  toll,  rental,  charge 
or  classification,  or  a  rule,  regulation  or  contract  relating  to  or 
affecting  any  rate.  fare.  toll,  rental,  charge,  classification  or  service, 
in  cases  other  than  those  covered  by  Rule  XVII,  on  less  than 
thirty  days'  notice,  under  the  provisions  of  Section  15b  of  the 
Public  Utilities  Act. 

1.  The  petition,  in  addition  to  the  requirements  of  Rule  IX, 
must  state: 

(a)  Such  facts  in  connection  with  the  matter  and  the  reasons 
for  the  desired  relief  as  may  be  specified  from  time  to  time  in  the 
Commission's  tariff  circulars  or  other  applicable  orders  or  instructions. 

2.  With  the  petition  must  be  filed: 

{a)     Such    schedules    or    data,    if    any,    as    the    Commission's  Schedules  or  data, 
tariff  circulars  or  other  applicable  orders,  or  instructions  may,  from 
time  to  time,  specify. 

3.  If  the  Commission  is  satisfied  with  the  showing  so  made, 
it  may  take  action  on  the  application  ex  parte:  otherwise  it  may 
order  a  hearing  and  give  notice  thereof  to  such  corporations  or 
persons  as  it  may  consider  necessary  or  desirable. 


Facts  hearing 
on  applications. 


Action  of 
Commission. 


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264 


LOUIS  SLOSS  h  CO. 


Information  rc' 
quired  with  ap- 
plication to 
refund. 


Statement  of 
facts. 


RULE  XIX. 

Excessive  or  Discriminatory  Charges — ^Applications  for 

Permission  to  Refund. 

When  application  is  made  by  any  public  utility  to  make 
reparation  to  any  shipper  or  consumer  on  account  of  the  rates 
charged  to  said  shipper  or  consumer  being  excessive  or  discrimina- 
tory, under  the  provisions  of  Section  21  of  Article  XII  of  the 
Constitution  of  this  State, 

1.  The  petition,  in  addition  to  the  requirements  of  Rule  IX. 
must  state: 

(a)  Such  facts  in  connection  with  the  matter  as  may  be 
specified  from  time  to  time  in  the  Commission's  tariff  circulars  or 
other  applicable  orders  or  instructions. 

2.  With  the  petition  shall  be  filed: 

(a)  Such  admissions,  undertakings  or  statements  on  the  part 
of  the  applicant  as  the  Commission's  tariff  circulars  or  other 
applicable  orders  or  instructions  may,  from  time  to  time,  specify. 

3.  If  the  Conunission  is  satisfied  with  the  showing  so  made,  it 
may  take  action  on  the  application  ex  parte:  otherwise  it  may 
order  a  hearing  and  give  notice  thereof  to  such  corporations  or 
persons  as  it  may  consider  necessary  or  desirable. 

RULE  XX. 

Extensions  of  Time  to  File  Required  Reports,  State- 
ments OR  Data  or  to  Comply  with  Commission's 
Orders — ^Applications  for. 

Whenever  a  public  utility  has  been  required  by  the  Commission 
to  file  any  report,  statement  or  data  or  to  comply  with  any  other 
order  of  the  Commission  within  a  time  specified,  and  for  any 
reason  is  unable  to  do  so  within  the  time  specified,  it  must,  before 
the  expiration  of  such  time,  file  with  the  Commission  an  application 
for  extension  of  time,  in  which  event: 


Admissions, 


Action  of 
Commission. 


Information 

required  with 

applications  for 

extension  of 

time  to  file 

reports. 


RULES  OF  PRACTICE  AND  PROCEDURE. 


265 


L     The  petition  shall  set  forth  in  deUil: 

(fl)  What,  if  any,  effort  has  been  made  by  the  applicant 
to  prepare  such  report,  statement  or  data  or  to  comply  with  such 
order. 

(h)  Any  facts  tending  to  show  why  the  said  report,  statement 
or  data  cannot  be  filed  or  said  order  complied  with  within  the 
time  prescribed. 

(c)  Any  other  facts  which  may  make  an  extension  of  dme 
necessary  or  proper. 

{d)  The  further  period  of  time  deemed  necessary  by  Ae 
applicant  within  which  to  make  and  file  such  report,  statement  or 
data  or  to  comply  widi  such  order. 

2.  The  Commission  may  direct  a  hearing  upon  said  petition 
and  m  that  event  the  applicant  shall  attend  before  the  Commission 
or  the  Commissioner  holding  the  hearing  and  produce  such  witnesses 
and  documents  as  the  Commission  may  require. 


Efforts  made  to 
prepare  reports. 


Reasons  for 
dela^. 


Time  necessarif 
to  complete. 


Action  of 
Commission, 


RULE  XXI. 
Other  Applications. 

All  applications  relatmg  to  matters  over  which  the  Commission  Information  re" 
has  jurisdiction  and  which  are  not  governed  by  any  of  the  preceding  quved  with 
rules  shall  be  made  by  petition,  setting  forth  the  name  and  address  other  appUcaU<m. 
of    the    applicant    and    the    matter   with    reference    to    which    the 
Commission's  order,  authorization  or  permission  is  desired.     There- 
iqx>n  the  procedure  shall  be  such  as  the  Commission  may  prescribe. 

RULE  XXII. 
Deviations  from  Rules — ^Authorization  for. 

In  special  cases,  for  good  cause  shown,  the  Commission  may 
permit  deviations  from  these  rules,  in  so  far  as  it  may  find  com- 
pliance therewith  to  be  impossible  or  impracticable. 


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266 


LOUIS  SLOSS  at  CO. 


RULE  XXIIL 
Amendment  of  Rule3. 

These  rules  may  be  amended  at  any  regular  session  of  the  Com- 
mission. 

RULE  XXIV. 
Forms  Prescribed  for  Use. 

The  following  fonns  may  be  used  in  cases  to  which  they  are 
applicable,  with  such  modification  as  the  circumstances  may  render 
necessary: 

L  Formal  Complaint 

2.  Formal  Application. 

3.  Order  to  Satisfy  or  Answer  a  Complaint. 

4.  Answer. 

5.  Notice  of  Hearing  on  Complaint 

6.  Published  Notice  of  Hearing  on  Application. 


Formal 
complaint. 


.No, 


No.  L 
FORM  OF  FORMAL  COMPLAINT 

Before  the  Railroad  Commission  of  the  State  of  California. 

(Insert  name  of  complainant) 

ComplainanU 
ft. 
(Insert  name  of  defendant) 

Defendant. 

COMPLAINT. 
The    complaint    of    (here    insert    full    name    of    complainant) 
respectfully  shows: 

1.     That    (here   state   occupation    and    post-office    address   of 
complainant). 


(To  be  Inserted  by  Secretary  of 
Commission.) 


RULES  OF  PRACTICE  AND  PROCEDURE. 


2.  That  (here  insert  full  name,  occupauon  and  post-office 
address  of  defendant). 

3.  That  (here  insert  fully,  clearly  and  specifically  the  act 
or  thmg  done  or  omitted  to  be  done  which  complainant  claims 
constitutes  a  cause  of  complaint,  with  a  reference  to  the  law,  order 
or  rule,  and  the  section  or  sections  thereof,  of  which  a  violation 

is  claimed). 

Wherefore  complainant  asb  (here  state  specifically  die  relief  to 

which  complainant  believes  he  is  entitled). 

Dated  at    t  California,  this    

day  of t  191 . .. 


(Complainant's  name.) 


ss. 


(Name  and  address  of  attorney,  if  any.) 

State  of  California,  ) 
County  of    \ 

(Insert  name  of  complainant  or  other  person  qualified  to  verify), 
bemg  first  duly  sworn,  deposes  and  says:  That  he  is  the  com- 
plainant in  the  action  entitled  as  above;  that  he  has  read  the 
foregoing  complaint  and  knows  the  centents  thereof;  and  that  the 
same  is  true  of  his  own  knowledge,  except  as  to  the  matters  whicK 
are  therein  stated  on  information  or  belief,  and  that  as  to  those 
matters  he  believes  it  to  be  true. 


Subscribed  and  sworn  to  before  me,  this 

191... 


day  of 


Notary  Public  in  and  for  the 
State  of  California. 


County  of # 


267 


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268 


LOUIS  SLOSS  k  CO. 


No.  2. 
Forma/  FORM  OF  FORMAL  APPLICATION 

application.        Before  the  Raflroad  Commisiion  of  the  Sute  of  California. 

In  the  matter  of  the  Application  of 
(here  insert  name  of  applicant) 
for  (here  insert  desired  order, 
authorization,  permission  or  cer- 
tificate: thus.  **order  authorizing 
issue  of  stocks  and  bonds**). 


No 

(To  be  Inserted  by  Secretary  of 
Commission.) 


APPLICATION. 
The   petition   of    (here   insert   name   of   applicant)    respectfully 
shows: 

1.  That  (here  insert  principal  place  of  business  or  post-office 
address,  character  of  business  and  territorial  extent  thereof,  of 
applicant) . 

2.  That  (here  insert  clearly,  specifically  and  fully  the  facts 
required  by  these  Rules  and  any  additional  facts  which  the 
applicant  desires  to  state  to  show  the  relief  which  he  desires  and 
the  facts  on  which  it  is  based). 

Wherefore  petitioner  asks  that  the  Railroad  G>mmission  of  the 
State  of  California  (here  state  specifically  the  action  which  the 
applicant  desires  the  Railroad  Commission  to  take). 

Dated  at    California,  this    

day  of    •   191 . .. 


(Verification.) 


(Petitioner's   name.) 


(Name  and  address  of  attorney,  if  any.) 


RULES  OF  PRACTICE  AND  PROCEDURE. 


269 


No.  3. 

FORM  OF  ORDER  TO  SATISFY  OR  ANSWER  A  COMPLAINT  Order  to  satisfy 

or  ansiver 
Before  the  Railroad  Commission  of  the  State  of  California.        complaint, 

(Insert  name  of  Complainant) 

Complainant, 
vs. 


*i. 


.No. 


(Insert  name  of  defendant) 

Defendant, 


(Number     to     be     Inserted     by 
Secretary  of  Commission.) 


ORDER  TO  SATISFY  OR  ANSWER. 
To  (here  insert  name  and  address  of  defendant). 

You  are  hereby  notified  that  a  complaint  has  been  filed  in  the 
action  entitled  as  above  against  you  as  defendant,  and  you  are 
hereby  ordered  to  satisfy  the  matters  therein  complained  of  or  to 
answer  said  complaint  in  writing  within  ten  (10)  days  from  the 
service  upon  you  of  this  order  and  the  copy  of  said  complaint 
which  is  hereunto  attached. 

By  order  of  the  Railroad  Commission. 

Dated  at  San  Francisco,  California,  this    day  of 

191... 


Secretary   Railroad   (Commission  of 
the  State  of   California. 
(Railroad  Commission  Seal.) 


If  I'    I 


270 


LOUIS  SLOSS  «c  CO. 


Ansiver  to 
formal  complaint. 


No. 


(Inaert  number  of  case.) 


No.    4. 
FORM  OF  ANSWER  TO  FORMAL  COMPLAINT 

Before  the  Railroad  Commisaion  of  the  Sute  of  California. 

(Insert  name  of  complainant) 

ComplainanU 

(Insert  name  of  defendant) 

DefendatH. 

ANSWER. 
The  above  named  defendant,  for  answer  to  the  complamt  in  this 
proceeding,  respectfully  states: 

1.  That  (here  follow  specific  admissions  or  denials  of  the 
material  allegations  of  the  complaint,  and  also  the  facts  relied 
upon  as  a  defense.   G)ntinue  numbering  each  succeeding  paragraph). 

Wherefore  the  defendant  prays  that  the  complaint  be  dismissed 
(or  other  appropriate  prayer). 


(Verification.) 


(Name  of  defendant) 


RULES  OF  PRACTICE  AND  PROCEDURE. 


271 


No.  5. 
FORM  OF  NOTICE  OF  HEARING  ON  COMPLAINT 

Before  the  Railroad  Commission  of  the  State  of  California. 

(Insert  name  of  complainant)     ^ 

Complainant, 


Notice  of 
hearing  on 
complamt. 


(Insert  name  of  defendant) 

Defendant 


I  No, 


(Insert  number  of  case.) 


NOTICE  OP  HEARING. 

To  (here  insert  names  of  all  parties). 

You   and  each  of   you  are  hereby  notified  that  the   Railroad 
Commission  of  the  Sute  of  California  has  set  the  above  entitled 

case    for   hearing   before    Commissioner    

on  (day  of  week),  the  (day  of  month),  day  of  (name  of  month). 

191 ...  at o'clock  .  .  M.,  in  the  office  of  the  Commission, 

Room    ,    Building.    San    Francisco, 

California,  at  which  time  and  place  you  will  be  given  an  oppor- 
tunity to  be  heard. 

By  order  of  the  Railroad  Commission. 

Dated  at  San  Francisco.  California,  this    day 

of 191... 


Secretary  Railroad  Commission  of 
the  State  of  California. 


(Railroad  Commission  Seal.) 


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272 


LOUIS  SLOSS  h  CO. 


No.  6. 
Publish  notice  FORM  OF  PUBLISHED  NOTICE  OF  HEARING  ON  APPUCATION 

of  hearing  on  .   .     ^         #  *^  ,•«      • 

Before  the  RaUroad  Commission  of  the  State  of  Califonua. 


application. 


No. 


(InMit  number  of  case.) 


In  the  matter  of  the  Application  of 
(here  insert  name  of  applicant) 
for  (here  insert  desired  order, 
authorization,  permission  or 
certificate). 

NOTICE  OF  HEARING. 

Notice  is  hereby  given  that  the  application  of  (name  of 
applicant  in  full)  for  the  (approval,  determination,  consent,  per- 
mission, certificate  or  authorization)  of  the  Railroad  Commission 
of  the  State  of  California  to   (here  state  nature  of  consent  asked 

for)  will  be  heard  before  Commissioner at  the 

office  of  the  Commission  in  the   Building,  San 

Francisco,  California,  on    (day  of  week),   the    (day  of  month) 

day   of    (name   of  month),    191..,    at    o'dock  in   the 

noon. 

By  order  of  the  Railroad  Commission. 

Dated  at  San  Francisco,  California,  this   day 

of 191... 


Secretary  Railroad  Commission  of 
the  State  of  California. 


IM 


General  Index. 


Page 

Introduction 13 

John  M.  Eshleman,  President  of  the  Commission. 

Biographies  of  Commissioners 14 

The  Public  Utilities  Act  and  Its  Relation  to  the  Public.  . 17 

Max  Thelen,  Commissioner  and  Attorney  for  the 

Commission. 

Valuation  of  Public  Utilities 27 

Henry  Lardner.  Manager  San  Francisco  Office, 
J.  G.  White  &  Co.,  Engineers. 

Index  to  Leadmg  Railroad  and  Public  Service  Commissions.  .  275 

Index  to  Constitutional  Amendment  No.  50 279 

Index  to  Constitutional  Amendment  No.  6 279 

Index  to  Constitutional  Amendment  No.  47 280 

Index  to  Public  Utilities  Election  Act 280 

Index  to  Public   Utilities  Act 281 

Index  to  Rules  of  Practice 297 


INDEX. 


275 


Leading  Railroad  and  Public  Service 

G)mmissions. 

SUBJECT  INDEX 

Section  Page 

Introduction  to  report 35 

OREGON. 

Introduction i  36 

Organization  and  oflfice  system 2  36 

Physical  valuation  3  37 

Public  utilities ^  ^ 

Rate  making  5  ^g 

Express  rates 5  ^ 

Litigation 7  ^j 

Grade  crossings  g  ^i 

Complaints  to  Interstate  Commerce  Commission 9  42 

Car  for  track  scale  tests 10  42 

Long  and  short  haul  clause n  43 

Co-operation 12  43 

WASHINGTON. 

Introduction i  44 

Organization  and  office  system 2  44 

Physical  valuation 3  45 

Engineering  department 4  47 

Court  proceedings  5  48 

Service  and  facilities 5  50 

Public  utilities   7  50 

Rate  fixing g  ^j 

Results  attained  by  the  Commission 9  51 

NEBRASKA. 

Introduction i  ^ 

Organization  and  office  system 2  53 

Stock  and  bond  law 3  re 

Telephone  companies   4  c6 

Electric  street  railways 5  56 

Rate  litigation   5  ^ 

Monthly  reports  from  railroads 7  ^g 

Annual  reports    g  eg 

Form  of  accounts  g  e9 

Physical  valuation   i©  eg 

Attitude  toward  physical  valuation n  61 

New  procedure  on  appeal 12  62 

Changes  in  schedules 13  ^ 


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276 


LOUIS  SLOSS  k  CO. 


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Leading  Railroad  and  Pubuc  Service  CoMMissioNS-ContimieJ 

Section  Page 

MINNESOTA.  ^^ 

I         03 

Introduction j         53 

Organization  and  office  system ^ 

Express  investigation *  *  ^         ^ 

Minnesota  rate  case ^         ^ 

Federal  courts  "  g         53 

Changes  in  rates  ^         ^ 

Grade  crossings   "*  g         ^ 

Physical  valuation *  *  *  ^         ^ 

Form  of  accounts ^^         ^ 

Service  and  facilities  ""  ^^         ^ 

Interstate  commerce  ^^         ^j 

Accident  reports 13         71 

Litigation 

WISCONSIN.  _ 

I         7* 

Introduction 2         7a 

Organization  and  office  system ^         ^^ 

Procedure  on  appeal ^         ^ 

Rate  fixing .!!!.........  S         ^ 

Stock  and  bond  law 6        77 

Indeterminate  permits  .         ^ 

Use  of  facilities  by  other  utilities g         ^ 

Physical  valuation 9         79 

Depreciation  account  •  •  •  • j^         g^ 

Public  convenience  and  necessity  law •  *  *  *  *  ^^         ^ 

Rate  changes 12         8« 

Municipal  councils j.         gi 

Gas,  electric  and  telephone  inspection ^^         g^ 

Rate  department  ,-         g3 

Department  of  statistics  and  accounts ^^         ^ 

Express  investigation    j^         g^ 

Writing  of  opinions 18         86 

Cost  basis ; *  * *.*  *.* ,q         85 

Relation  between  state  university  and  commission 

NEW  YORK. 

SECOND  DISTRICT. 

1            o7 

Introduction 2         88 

Organization  and  office  system 

Division  of  heat,  light  and  power ^         ^^ 

Division  of  statistics  "'"  ^         ^ 

Division  of  Uriffs g         ^ 

Division  of  traffic  ; .         ^ 

Division  of  engineering  and  inspection 


INDEX. 


277 


Leading  Railroad  and  Pubuc  Service  Commissions— ConfinucJ 

Section  Page 

Division  of  telegraphs  and  telephones *  93 

Stocks  and  bonds ^  ^ 

Certificate  of  public  convenience  and  necessity W  95 

Physical  valuation  *'  ^ 

Rate  fixing   "  ^ 

Relation  with  newspapers  • '3  ^ 

Relation  between  commission  and  corporations U  9° 

Elimination  of  grade  crossings '5  99 

Discounts  and  expenses '"  ^ 

Amortization  fund  ' 

MASSACHUSETTS. 
A. 

lAILBOAO  COMMISSION. 

Introduction '  ^^ 

Organization  and  office  system ^  ^°' 

Rate  fixing  ^ 

Facilities,  equipment,  safety  devices 4  I03 

Powers  of  board  as  to  charters,  finances,  and  construction 5  I03 

Grade  crossings  ^  ^^ 

Court  procedure  7  i<v 

Preparing  annual  report °  *"° 

Library ^  w* 

Inspectors ^®  ^^ 

6. 

GAS  AND  ELECTRIC  COMMISSIONERS. 

Introduction ^ 

Organization  and  office  system ^  "° 

„  f   £  .                                                                                 3  III 

Rate  fixing ^ 

Stocks,  bonds,  consolidation 4  112 

New  gas  or  electric  plants S  112 

Accounts ^ 

Utigation 7  "3 

NEW  YORK 

FIRST  DISTRICT. 

Introduction '  ^^ 

Organization  and  office  system *  '^ 

Legal  department 3  '^7 

Stocks  and  bonds • 4  1^9 

Certificates  of  public  convenience  and  necessity 5  121 

Approval  of  franchises  "  '^ 

Franchise  bureau  7  122 

Physical  valuation ^  ^*4 


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LOUIS  SLOSS  &  CO. 


Leading  Railroad  and  Public  Service  Commissions — Continued 

Section  Page 

Newspapers  9  124 

Library 10  125 

Accidents xi  125 

MARYLAND. 

Introduction z  125 

Organization  and  office  system 2  126 

Stock  and  bond  issues 3  126 

INTERSTATE  COMMERCE  COMMISSION. 

Note I  127 

GEORGIA. 

Introduction I  127 

Organization  and  office  system 2  128 

Legal  department 3  129 

Rates 4  129 

Stock  and  bond  issues 5  130 

Express  rates   6  131 

Public  utilities   7  131 

Telephone  and  telegraph  companies 8  131 

Court  review  and  appeal 9  131 

Railroad  maps 10  132 

Passenger  train  delays ll  132 

General  orders,  rules  and  regulations 12  132 

TEXAS. 

Introduction I  133 

Organization  and  office  system 2  133 

Railroad  rates 3  133 

Emergency  rates 4  134 

Express  rates  S  135 

Department  of  statistics  and  accounts 6  136 

Valuation  of  railroad  properties 7  137 

Stock  and  bond  law 8  139 

Control  over  corporations 9  139 

Depot  complaints  10  140 

Newspapers 11  140 

OKLAHOMA. 

Introduction I  140 

Organization  and  office  system 2  141 

Court  procedure 3  142 

Litigation  4  144 

Commission's  business  5  ^47 

Auditing  department  6  149 


INDEX. 


279 


Leading  Railroad  and  Public  Service  Commissions — Continued 

Section  Page 

Engineering  department  7        150 

Telephone  department  8        150 

Rate  department  9        151 

Corporation  clerk  department 10        151 

Municipal  utilities 11        151 

Gas  and  electric  companies 12        152 

Use  of  initiative  by  corporations 13        152 

RECOMMENDATIONS ; 152 


Assembly  Constitutional  Amendment  No.  50. 

Page 

Decision  of  Commission  not  subject  to  review,  except 155 

Discrimination — railroads  may  not  discriminate  in  charges  or  facilities,  or 

between  places  or  persons 155 

Long  and  short  haul — regulation  of 156 

Rates — railroad,  may  not  be  raised  without  approval  of  Commission 155 

Reparation  to  shippers — Commission  may  order 156 

Special  cases— exceptions  in,  to  be  approved  by  Commission 156 


Assembly  Constitutional  Amendment  No.  6. 

Page 

Act  of  1911 159 

Additional  powers 159 

Commission — powers  of,  to  establish  rates 158 

Powers  of,  to  examine  records 159 

Commissioners — to  be  appointed 157 

Disqualifications 158 

Removal  of 158 

Term  of  office  six  years 157 

Vacancies,  to  be  filled  by  Governor 158 

Districts — State  may  be  divided  into 157 

Facilities — Commission  to  control 159 

Orders — Commission  to  enforce 159 

Orders  of  Commission  effective  upon  approval  of  majority 158 

Powers — additional 159 

Powers  of  Commission — ^to  establish  rates 158 

To  examine  records 159 

Railroad  Commission  Act  of  191 1 159 

Railroad  Commission — to  consist  of  five  members 157 

Service — Commission  to  control 159 


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Senate  G)nstitutional  Amendment  No.  47. 

Page 

Public  utilities— defined  by  Constitutional  Amendment l6i 

Placed  under  control  of  Railroad  Commission '"* 

Powers  of  Commission  plenary ^"^ 

Jurisdiction  of  Commission •  •  •  • '"* 

Powers  vested  in  boards  of  supervisors  respecting  public  utilities  to  cease, 

except '^ 

Procedure  under  which  municipalities  may  retain  control i"* 

Municipalities — ^procedure  under  which  they  may  retain  control l6a 


Public  Utilities  Ejection  Act. 

Ballot — form  of,  election  to  retain '"7 

Form  of,  election  to  surrender ^7^, 

Form  of,  election  to  re-invest '7^ 

Control  of  public  utilities — ^municipalities  may  retain I^ 

Municipalities  may  surrender '"3 

Municipalities  may  re-invest  themselves  with ^^^3 

Municipalities  may  re-invest  themselves  with  control ^7^ 

How  question  may  be  submitted  to  the  people 164 

Procedure  when  municipality  has  elected  to  control i/o 

Question  of  control  may  be  submitted  to  voters  at  any  election 171 

When  question  may  be  submitted  to  the  people 164 

Definitions  of  various  terms '^ 

Election— to  retain,  canvassing  returns  of i^ 

To  surrender— canvassing  returns  of ^70 

To  re-invest — canvassing  returns  of ^72 

Laws  governing  special  municipal  elections  to  apply I73 

One  copy  of  returns  must  be   filed   with   Commission   if  municipality 

delegates  control ^°9 

Elections — special,  under  the  Act i^ 

Under  Act »72 

"Legislative  Body"  defined 163 

Limitations ^72 

"Municipal  Corporation"  defined 163 

Municipalities— control  of  public  utilities 163 

May  retain  control - '"3 

May  surrender  control '^3 

May  re-invest  themselves  with  control 163 

Ordinance — ^publication  of 167 


INDEX. 


281 


PUBLIC  UTIUTIES  ELECTION  ACT— Continued 

Page 

Petition — filing  of  164 

Form  of 164 

Identification  of  signatures 165 

New 165 

Must  be  certified 165 

Supplementary 165 

Ten  per  cent,  of  qualified  electors  must  sign 164 

Voters — instructions  to 168 


Public  Utilities  Act. 


Page 

Abatement — ^no  cause  of  action  to  abate  because  of  this  act 241 

Accidents — Commission  to  investigate 207 

Report  of  filed  with  Commission 207 

Account — for  disposition  of  proceeds  of  sale  of  stocks,  bonds,  etc 216 

Accounts — ^kept  by  public  utility 231 

Production  of  from  without  State 224 

Subpoena  for  production  of 220 

System  of,  prescribed  by  Commission 210 

Act — name  of 175 

Action — cause  of,  when  shall  accrue  in  court 228 

Right  of,  not  affected  by  this  act 236 

Additional  cars — Commission  may  order 203 

Adequate  service  to  be  furnished 185 

Annual  reports— of  Commission 185 

To  be  furnished  to  Commission  by  public  utilities 198 

Appeal  to  Supreme  Court  may  be  made 229 

Appeals — in  mandamus  or  injunction  proceedings  instituted  by  Commission 236 

Appliances — safety,  to  be  approved  by  Commission 201 

Appointment  of  Commissioners 180 

Arrests — assistant  secretary  to  make 182 

Articles  of  incorporation — ^must  be  filed  with  Commission 212 

Assignment— order  authorizing  to  be  obtained 213 

Assistant  secretary  of  Commission 182 

Attorney — appointed  by  Commission 181 

Parties  may  be  represented  by 226 

Attorney  General — when  to  conduct  trial  in  court 235 

Attorneys — public,  shall  assist  Commission 235 


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PUBLIC   UTILITIES  ACT—Contmued 

Page 

Auto  stage  and  stage  lines — Commission  to  control 201 

Billing— false  and  other  similar  offenses  prohibited '^ 

Blanks— furnished  by  Commission  to  be  properly  filled '^ 

Board  of  control  to  audit  claims ^^ 

Bond— may  be  increased  by  order ^^ 

To  be  executed  on  stay  of  order  by  supreme  court 231 

Bonds— account  for  disposition  of  moneys  derived  from  sale  of 216 

Authorized  by  public  utilities  prior  to  act  and  not  issued 219 

Fees  on  order  of  authorization  of ^3 

Issue  of,  subject  to  regulation •  *  •  •  *^^ 

Public  Utilities— May  issue,  less  than,  equivalent  to  or  greater  than  author- 
ized or  subscribed  capital  stock ^'5 

Payable  in  more  than  twelve  months ^'^ 

Proceeds  of  sale  to  be  applied  to  purposes  specified  in  order 216 

Issued  without  order  of  Commission  are  void 217 

Penalty  for  fraudulent  issue  of *^J 

Approval  of,  by  Commission,  no  guarantee 218 

Authority  of  articles  of  incorporation,  vote  of  stockholders  or  directors 
previous  to  taking  effect  of  this  act  not  sufficient  for  issuing  without 

order  of  Commission  ^ 

Commissioners  or  employees  must  not  own,  except 182 

Conditions  under  which  public  utilities  may  issue 214 

Issue  must  be  authorized  by  Commission 215 

Investigations  by  Commission  ^'^ 

Books— subpoena  for  production  of ^^ 

Cars— carriers  to  interchange  • ^^^ 

Power  of  Commission  to  order  use  of  additional 203 

Car  service— Commission  may  order  through • •••••  200 

Certificate  of  public  necessity  must  be  obtained  before  exercising  right  of  old 

franchises 

Certificate  of  public  necessity  must  be  obtained  before  beginning  any  new 

construction,  except  

Certificate— issued  on  terms  and  conditions ^^^ 

Issuance  of  or  refusal 

Of  public  convenience  and  necessity *" 

Of  public  necessity,  articles  of  incorporation  filed  on  application  for 212 

That  order  has  not  been  revoked  recorded  with  county  recorder 222 

Certiorari— writ  of  (see  Review) ^^ 

Writ  of,  to  supreme  court ^ 

Changes  in  schedules  to  be  approved J^7 

Charges — Commission  may  fix J 

Must  not  exceed  those  in  effect  October  10,  19" ^^ 

Public  utilities  must  publish ^^^ 

To  be  fixed  by  Commission ^^ 


INDEX. 


283 


PUBLIC   UTILITIES  ACT— Con/mucJ 

Charges — Continued.  Page 

To  be  just  and  reasonable 185 

Charitable  institutions — passes  to  inmates 189 

Claims — false,  prohibited I95 

Qassifications— of  rates  by  carriers  to  be  filed 185 

Of  service,  electricity,  etc 208 

To  be  fixed  by  Commission 199-200 

To  be  changed  only  on  notice  to  Commission 187 

Commission — defined 176 

Findings  of  fact  conclusive 230 

May  alter  or  modify  rates 227 

May  authorize  employee  to  inspect  books,  accounts,  etc 224 

May  issue  process  to  enforce  attendance  of  witness 225 

May  inspect  books,  papers,  documents  and  accounts 224 

May  order  production  of  books,  accounts,  etc.,  from  without  the  state 224 

May  report  to  superior  court  refusal  to  testify,  produce  books,  etc 221 

May  suspend  rates  227 

To  enforce  law  of  state 235 

Upon  notice,  may  rescind,  alter  or  amend  order 228 

Commissioner — appointment 180 

Defined 176 

Commissioners — removal  of 181 

Salary  of  184 

Vacancies 181 

Common  carrier— defined ^77 

Long  and  short  haul  provision I95 

To  establish  joint  rates,  when 200 

May  not  engage  in  transportation  until  schedules  are  filed 188 

Competition — Commission  to  settle  disputes  as  to, 211 

Complaint— all  matters  may  be  joined  in  one  hearing 225 

For  enforcement  of  order  of  reparation  filed  in  court  in  one  year 234 

Not  to  be  dismissed  because  of  absence  of  direct  damage 225 

To  be  filed  within  two  years 234 

Public  utility  shall  have  right  to  file 226 

Regarding  charges  for  gas,  electricity,  water  or  telephone,  by  whom  to 

be  made  224 

Who  may  make  complaints  against  public  utilities 224 

Method  of  handling  by  Commission 224 

Copy  of,  to  be  served  on  alleged  offender 225 

Complaints  by  public  utilities  may  be  heard  ex-parte 226 

Consolidation— contract  for,  not  to  be  capitalized 216 

Consolidations — ^public  utilities  may  not  make  without  permission  of  Com- 
mission    213 

Construction — ^new,  certificate  of  necessity 211 

Of  act 241 


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PUBUC  UnUTIES  ACT— CoirfmueJ 

Pago 

Constitutionality  of  act— intention  of  legislature  sUted M^ 

Consumer  may  have  meter  tested *^ 

Contempt *3^ 

Power  to  punish  for ^^ 

Process  on  ^^9 

Violation  of  order  of  Commission  constitutes 239 

Control  of  all  public  utilities  vested  in  Commission 199 

Copies— of  official  documents  and  orders  filed,  evidence Ma 

Corporation— defined ^7^ 

Right  to  be,  not  to  be  capitalized ^^^ 

Crossings — grade  prohibited,  except  *» 

All  railroad,  under  jurisdiction  of  Commission »7 

Commission  may  abolish  *^ 

Commission  may  require  separation  of  grades ao7 

Cost  of  work  to  be  divided *V 

Power  of  Commission  relative  to *» 

Damages — ^by  way  of  example ^35 

Public  utilities  may  be  sued  for  actual  and  exemplary 235 

Public  utility  using  other  public  utilities*  equipment  liable  for ao6 

Decision— copy  of  to  be  served  on  corporation  or  person  complained  of 225 

Of  Commission  to  be  complied  with I99 

Shall  be  made  and  filed  after  hearing  concluded 225 

Defendant  entitled  to  hearing  225 

Demurrage— charges  to  be  uniform 208 

Deposition — ^provision  for  taking 230 

Depreciation  account  to  be  carried  as  prescribed 210 

Depreciation  charges — Commission  to  fix 210 

Depreciation  funds — Commission  to  prescribe  rules  for  expenditure  of 21 1 

Definitions — "Commissioner"  'T^ 

"Commission" ^7^ 

"Common  carrier" '77 

"Corporation" 17^ 

"Express  corporation" ^77 

"Electrical  corporation" '78 

"Electrical  plant" '78 

"Employees" '5© 

"Families" '90 

"Gas  corporation" '7^ 

"Gas  plant" '7^ 

"Person"  '7^ 

"Pipeline" '77 

"Pipe  line  corporation" '78 

"Public  utility '*> 


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INDEX. 


285 


PUBUC  UTILITIES  ACT— ConfmucJ 

Definitions — Continned  Page 

"Railroad" '77 

"Railroad  corporation" '77 

"Street  railroad" '7^ 

"Street  railroad  corporation" '7^ 

"Telegraph  corporation"  '79 

"Telegraph  line" '79 

"Telephone  corporation" I79 

"Telephone  line" '79 

"Transportation  of  persons" 17^ 

"Transportation  of  property" • '7<5 

"Vessel" '80 

"Warehouseman"  'So 

"Water  corporation"  '79 

"Water  system"  '79 

"Wharfinger"  '80 

Discrimination — by  carriers  prohibited 188 

By  means  of  false  billing,  etc.,  prohibited I94 

By  public  utilities  other  than  carriers 19' 

Common   carriers   must   provide   facilities    for   interchange   of   business 

without '93 

Public  utilities,  prohibited  from,  between  localities  or  classes  of  service 192 

Disposition  of  certain  property— public  utilities  may  not  make  without 

permission  of  Commission 213 

District  attorney — when  to  aid  in  trial  in  court 235 

Dividends— Commission  may  allow  distribution  of 192 

Division  of  rates — Commission  may  establish  on  through  business 200 

Duty  of  public  utility  to  furnish  commodity  or  perform  service 201 

Economies — public  utility  may  profit  from 192 

Electrical  plant  defined 178 

Electrical  corporation  defined 178 

Employees  of  Commission— compensation  of 184 

How  paid 184 

Expenses 184 

Defined  190 

Engineers— employment  of 182 

Equipment — commission  may  order 208 

Suitable,  to  be  employed 185 

To  be  approved  by  Commission 201 

Public  utility  using  other  public  utilities'  equipment  liable  for  damage 206 

Telephone,  Commission  may  order  joint  use  of 205 

Evidence — accident  reports  not  to  be  used  as 207 

Copies  of  documents  as 222 

Who  may  oflFer  at  hearing 225 


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PUBLIC  UTILITIES  ACT— ConfmucJ 

Evidence— Cofi/mw^rf.  Pago 

Certified  copies  of  records  accepted  as 222 

Commission  may  take  *** 

Commission  not  bound  by  technical. 219 

No  new  or  additional,  may  be  introduced  in  the  supreme  court 229 

Excess  charges — complaints  on  within  two  years 234 

Expenses— of  Commission  paid,  how  ^^ 

Experts — employment  of ^°2 

Express  corporation— defined ^77 

Reduced  rates  by,  prohibited ^89 

Express  packages — Commission  to  fix  zones  for  free  delivery  of 208 

Time  of  receipt,  etc 208 

Extensions— certificate  of  public  convenience  and  necessity 211 

Power  of  Commission  to  order 202 

Facilities — ^inadequate.  Commission  to  protect  public  from 201 

Must  be  uniform  ^o^ 

Public  utility  must  be  adequate '85 

Telephone,  Commission  may  order  joint  use  of 205 

False  billing  prohibited '94 

Families — defined ^9*^ 

Fares— Limitation  on  charges  by  street  or  interurban  railroad 197 

Schedules  to  be  filed i8S 

To  be  changed  only  on  notice  to  Commission i$7 

To  be  fixed  by  Commission IQP 

Fees— certificate  authorizing  issue  of  bonds,  notes,  etc 223 

Certified  copies  of  documents 223 

For  testing  of  meter,  etc 208 

Of  witnesses  and  mileage 220 

For  papers,   records,  official   documents,   reports  of  public  utilities  and 

reports  of  Commission 223 

Paid  into  state  treasury  to  credit  of  "Railroad  Commission  Fund" 223 

Findings  admissible  in  evidence 233 

By  single  commissioner  183 

Of  fact  shall  be  conclusive 229 

Fine— prescribed  for  violation  of  act  or  of  order  of  Commission 238 

Foreign  corporations — restrictions  on  right  to  transact  public  utility  business. .  197 

Foreign  public  utility  corporations — limitation  placed  on 197 

Franchises— corporation,  not  to  be  capitalized ai6 

Franks— free  telephone   and   telegraph 191 

Free  delivery— Commission  to  fix  zones  for  free  delivery  of  express  packages. .  208 

Of  telephone  messages 208 

Of  telegraph  messages  208 

Free  transportation — for  Commission 184 

For  exhibits  permitted 191 


INDEX. 287 

PUBLIC  UTILITIES  ACT— Con^inucJ 

Free  Transportation— Con/mu^d.  Page 

In  case  of  public  calamity,  permitted 191 

Gas  corporation  defined  178 

Gas  plant  defined 178 

Good  will,  corporation — ^not  to  be  capitalized 216 

Grade  crossings— construction  of  in  future  prohibited 206 

Power  of  Commission  to  abolish 207 

Hauls — ^long  and  short,  regulation  of 195 

Hearing — by  single  commissioner  183 

Commission  may  initiate 227 

In  court  to  have  preference  on  calendar 232 

Who  may  be  heard  and  may  introduce  evidence 233 

Hearings — ^this  act  and  rules  of  practice  to  govern 219 

Improvements — Commission   may   order   new   buildings    for   convenience   of 

employees  or  public 202 

Commission  may  specify  manner  of  building  and  site 202 

Issue  of  stocks,  bonds,  notes,  etc.,  for 214 

Power  of  Commission  to  order 202 

Incrimination  no  excuse  for  refusal  to  testify 222 

Indebtedness — ^public  utilities  exempt  from  provisions  of  Sections  309  and  456 

of  the  Civil  Code  limiting 215 

Industrial  tracks — interchange  switching 204 

Information — Conunission  entitled  to,  from  public  utilities 198 

Furnished,  confidential  unless  ordered  published  by  Commission 198 

Injunction — Commission  may  seek  against  public  utility 236 

Inspection — accounts,  books,  papers,  etc 224 

Right  of  public  as  to  carriers'  schedules 185 

Interchange  of  business — common  carriers  must  provide  facilities  for,  without 

discrimination 193 

Between  telephone  and  telegraph  corporations,  under  certain  conditions..  194 

Of  passengers  and  freight  between  carriers 193 

Switching  to  industrial  tracks 204 

Interference — Commission  to  settle  disputes  as  to 211 

Interstate  commerce — ^this  act  not  to  apply  to 242 

Interstate  Commerce  Commission — Commission  may  petition 201 

Interstate  rates — Commission  to  investigate,  etc 201 

Filing  of  schedules  by  telegraph  and  telephone  corporations 192 

Interurban  railroad — fare  to  be  charged  within  city 197 

Investigation  of  accidents  207 

Issuance  of  securities— control  vested  in  the  state 214 

Joint  action — by  public  utilities.  Commission  may  order 202 

Joint  cost— of  structure  to  be  apportioned  between  public  utilities 202 

Joint  facilities — Commission  may  require  use  of 205 

Joint  rates — Commission  to  fix  over  common  carriers 201 


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PUBUC  UTILITIES  ACT— CoirfmueJ 

Joint  rates — Continued.  Page 

Between  telegraph  and  telephone  corporations 205 

To  be  fixed  by  Commission,  when 200 

Must  be  established '94 

Joint  tariff — only  one  copy  of,  need  be  filed 188 

Joint  tariffs — filing  of  schedules  showing 188 

Jurisdiction — of  Commission  generally  stated '99 

Of  supreme  court  exclusive 229 

No  other  than  supreme  court  shall  have 230 

Lease— order  authorizing  to  be  obtained 213 

Legislature — ^may  remove  Commissioners '8' 

Limitation  placed  on  foreign  public  utility  corporations I97 

Loading  of  cars — Commission  to  regulate ^oS 

Time  allowed  for  loading  or  unloading 208 

Commission  to  fix  demurrage  charges 208 

Long  and  short  haul — ^provision  as  to  carriers I95 

Rule  applied  to  telegraph  and  telephone  companies IQS 

Mandamus— Commission  may  proceed  against  public  utility  by 236 

Shall  lie  from  supreme  court  to  Commission 229 

Measurement  of  gas,  water,  electricity 208 

Mergers— public  utilities  may  not  make  without  permission  of  Commission 213 

Messages— one  telegraph  or  telephone  company  to  transmit  messages  of  another  194 

Meetings— of  Commission  to  be  public 183 

Meters — any  constmier  may  have  tested 209 

Fee  for  testing • 209 

Testing  of 208 

Mileage— may  be  demanded  at  time  of  service 220 

Ministers — ^passes  may  be  issued  to 189 

Misdemeanor — ^violation  of  confidence,  a 198 

Violation  of  act  or  of  order  of  Commission  a 238 

Money— impounded,  when  to  be  distributed  and  to  whom  paid 231 

Moneys— expended,  reimbursement  of  214 

Mortgage,  authorization  to  execute 213 

Municipal  corporations— powers  not  affected  by  this  act 240 

New  construction— certificate  of  necessity 211 

New  structures — ^power  of  Commission  to  fix  site aoa 

Notes— issue  of,  subject  to  regulation 214 

For  not  more  than  twelve  months,  may  issue  without  order 214 

Notice  of  change  in  rates,  fares,  etc.,  to  be  given  to  Commission 187 

Of  hearing  to  fix  valuation 333 

Posting  by  carrier  as  to  schedules 185 

Oaths — administration  of 220 

Of  office  of  commissioners  and  employees l8a 

OflSce— of  Commission  in  San  Francisco ifla 


INDEX. 


289 


t^^mm^nmt 


PUBUC  UTILITIES  ACT— Con/inueJ 

Page 

Order — ^authorizing  issue  of  bonds 217 

Authorizing  issue  of  stock 217 

Certain  may  be  recorded  with  county  recorder 222 

Copy  of  to  be  served  on  corporation  or  person  complained  of 225 

In  collateral  action,  when  conclusive 228 

May  be  altered,  amended  or  rescinded 228 

Obtained  by  false  representation,  penalty 217 

Of  Commission  to  be  complied  with igg 

Of  reparation 234 

Of  supreme  court  reversing  order  of  Commission  on  three  days'  notice 230 

Of  supreme  court,  suspending  order  of  Commission,  to  contain  finding 

of  damage 230 

On  writ  of  review,  supreme  court  may  suspend 230 

Production  of  books,  accounts,  etc.,  from  without  state 224 

Rescinding,  altering  or  amending,  to  be  served  on  public  utility 228 

Upon  hearing,  when  to  take  effect 226 

Stay  of,  bond  to  be  executed 231 

To  be  entered  on  records  of  Commission 222 

Orders  changed  by  Commission  should  have  effect  of  original  orders 228 

Orders  of  Commission— public  utilities  shall  obey  all 199 

Orders  of  suspension  should  not  be  over  120  days 227 

Extended  not  over  6  months 227 

To  go  into  effect  in  30  days 227 

Papers,  subpoena  for  production  of 220 

Passes — limitations  upon  issuance  of ign 

To  commissioners  and  employees jg^ 

Passengers — transfer  of  between  carriers 193 

Penalties — act  or  omission  of  officer  or  employee  deemed  to  be  act  of  public 

utility 238 

Actions  to  recover 239 

Cumulative 236 

For  issue  of  bonds,  stocks,  etc.,  in  non-conformity  with  order  or  contrary 

to  provisions  of  act 217 

For  violation  of  act  or  of,  orders  of  Commission  by  officers  of  corpora- 
tions other  than  public  utilities 239 

Misapplication  of  proceeds  of  sale  of  stocks,  bonds,  etc 217 

Moneys  recovered  to  be  paid  into  general  fund 239 

Negotiation  of  sale  of  bonds,  stocks,  etc.,  issued  in  violation  of  act 217 

Obtaining  order  by  false  representation 217 

Prescribed  for  violations  by  corporations  other  than  public  utilities 238 

Public  utilities  subject  to,  for  violation  of  law  or  of  order  of  Commission.  237 

Suit  to  recover,  not  bar  to  other  action 236 

Upon  any  officer,  agent,  employee  who  authorizes,  etc.,  issue  of  stocks, 

bonds,  etc.,  contrary  to  act 217 

Violation  of  law  or  of  order  of  Commission 238 


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PUBUC  UnUTIES  ACT— ConftrtueJ 

Page 

Pending— proceedings,  not  affected  by  this  act ^ 

Permits— corporation,  not  to  be  capitalized ^^" 

Of  proper  public  authorities  must  be  had *^ 

Person  defined  *. '^ 

Physical  connections— between  telephone  and  telegraph  compames »5 

Commission  may  order  between  carriers **3 

Physical  valuation  of  property— Commission  to  ascertain ^ 

Pipe  line  corporation  defined 'To 

Pipe  line  defined '^ 

Powers  of  Commission  generally  stated '59 

Commission  has  certain  powers  of  courts  of  record     2^9 

Practice— rules  of  •  •  • ^^^ 

Preferences  by  public  utilities  prohibited '9^ 

Preliminary  order  may  be  secured ^'^ 

Premises— public  utility  shall  be  open  to  Commission »9 

President  of  Commission • '*' 

Private  spurs— Commission  may  require  carrier  to  switch  to 204 

Privileges— must  be  uniform '^ 

Proceedings  of  Commission,  report  of *°5 

Proceeds  of  securities— public  utility  must  account  for 216 

Process— assistant  secretary  to  serve '*' 

Extends  to  all  parts  of  state *'5 

Property— acquisition  of,  issue  of  stocks,  bonds,  notes,  etc 214 

Valuation  of,  by  Commission *^ 

Property  which  may  be  sold ^'^ 

Public  convenience — certificate  of *" 

Public  inspection— information  furnished  to  Commission  not  open  to W 

Schedules  of  carriers  to  be  open  to • ;  •  •  •     '*5 

Public  to  be  protected  by  Commission  from  poor  service  or  inadequate  faalities    201 

Public— meetings  of  Commission  to  be '^3 

Public  utilities— Commission  to  control  all '99 

Charges  must  be  reasonable '°S 

Public  utility  corporations— foreign,  limitations  placed  on ^97 

Public  utility,  defined ^^ 

May  complain  to  Commission ^* 

Use  of  joint  facilities ^ 

Public  Utilities— all  must  report  to  Commission i^ 

Must  answer  all  questions  of  Commission ^^ 

Must  furnish  copies  of  records. '^ 

Must  furnish  complete  inventory  of  property i^ 

Information  confidential  unless  ordered  published  by i^ 

Violation  of  confidence  a  misdemeanor ^9© 

Must  report  annually ^^ 


INDEX. 


291 


PUBUC   UTILITIES   ACT— Continued 

Public  Utilities— Coii/tfiK^d  Page 

Must  obey  all  orders  of  Commission I99 

Must  not  discriminate  between  localities  nor  classes  of  service 192 

Must  not  grant  special  privileges 192 

Qualifications  of  Commissioners 182 

Quorum  of  Commission — ^what  constitutes 183 

Railroad  Commission  fund — moneys  to  be  credited  to 242 

Railroads — Commission  may  order  track  connections  with  street  car  lines 203 

Railroad  corporation  defined I77 

Railroad  defined  I77 

Rates — automatic  adjustment  of I93 

Commission  to  fix I99 

Commission  to  investigate 200 

Commission  may  alter  or  modify 227 

Commission  may  suspend 227 

Increases  of 227 

Period  for  which  may  be  suspended 227 

Schedules  of,  to  be  filed 185-187 

To  be  changed  only  on  notice  to  Commission 187 

When  to  go  into  effect 227 

Common  carriers  must  publish  and  file  interstate 192 

Compensation  for  transportation  may  not  differ  from  published 189 

Rates,  joint — Commission  to  fix 200 

Must  be  established 194 

Public  utility,  may  not  be  changed  without  30  days'  notice,  except 187 

Public  utility — must  be  same  to  all 191 

Public  utilities  must  publish 187 

Telephone — Commission  may  fix 205 

Commission  may  establish  joint  rates 205 

Telegraph — Commission  may  fix 205 

Commission  may  establish  joint  rates 205 

Telephone  and  telegraph — regulation  of  long  and  short  distance 195 

Record  of  proceedings  before  Commission  and  testimony  made  by  reporter 226 

Public  utilities  to  furnish  copies  to  Commission  on  demand 198 

What  shall  constitute 226 

Recorded — certified  copies  of  records,  orders,  etc,  may  be 222 

Records — kept  out  of  State — to  be  produced  if  Commission  requires 224 

of  public  utilities — Commission  to  have  free  access  to  all 224 

Commission  to  prescribe  forms  for 210 

Reduced  rates — ^prohibited  except  in  specified  cases 189 

Refunding  issue  of  stocks,  bonds,  notes,  etc 214 

Refunds  by  carriers  prohibited 189 

Cannot  be  made,  except  by  order  of  Commission 189 

Prohibited 191 


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PUBUC   UTILITIES   ACT— Continued 

Page 

Regulations— changes  in  to  be  approved  by  Commission 187 

Of  public  utilities  to  be  reasonable '°5 

Regarding  disposition  of  moneys  from  sale  of  stocks,  bonds,  etc 216 

Public  utilities  must  publish ^°7 

Rehearing— application  for,  does  not  of  itself  stay  order 228 

Application  for,  when  order  is  suspended 229 

Application  for,  time  within  which  shall  be  granted  or  denied 229 

What  shall  be  set  forth  in  application  for 228 

Who  may  apply  for  and  when 228 

Denial  of • 229 

Orders  of  Commission  must  be  obeyed  pending 229 

Applications  for ^^ 

No  cause  for  action  until  after  application  for 228 

Grounds  must  be  set  forth  in  application  for 228 

Removal  of  commissioner ^8x. 

Repeal — acts  repealed  by  this  act ^42 

Repairs — power  of  Commission  to  order 202 

Reparation — of  excessive  or  discriminatory  charges  and  interest 234 

Reports — annual,  made  by  all  public  utilities 198 

Commission  to  make  annually 185 

Of  accidents  to  be  filed  with  Commission 207 

To  be  furnished  to  Commission  by  public  utilities 198 

Re-valuations — Commission  may  make 209 

Review — stipulation  as  to  record  on 226 

Superior  Court  has  no  jurisdiction 230 

Writ  of,  no  new  or  additional  evidence  to  be  introduced  on  hearing 229 

What  shall  constitute  record  in  action  to 226 

Who  may  appear 230 

Writ  of,  when  lies  to  Supreme  Court 229 

Writ  of,  when  returnable 229 

Rights  of  action— this  Act  does  not  effect  236 

Rules— for  performance  of  service  or  furnishing  of  commodity  to  be  prescribed  202 

Of  Commission  to  be  complied  with I99 

Prescribed  by  public  utilities  to  be  reasonable 185 

Rules  of  practice— to  govern  hearings 219 

Rules— public  utility  must  be  reasonable 185 

Public  utilities  must  publish 187 

Rebates— procuring  of,  by  false  billing,  etc.,  prohibited I95 

Safety  devices — power  of  Commission  to  order  installation 206 

Salaries  of  Commissioners  and  employees 184 

Sale — order  authorizing  to  be  obtained 213 

Sales— without  order  of  Commission,  are  void 213 

Scale— sliding,  under  certain  conditions  public  utilities  may  csUblish 193 


INDEX. 


293 


PUBUC  UTILITIES  ACT— ConiinucJ 

Page 

Schedules — approval  of  changes  by  Commission 187 

Changes  in  form  to  be  approved 187 

Filed  by  carriers  to  show  what 186 

Of  carriers   to   conform   to    those   prescribed   by    Interstate   Commerce 

Commission 186 

Of  pubHc  utilities  other  than  carriers  to  be  filed 187 

Of  sliding  scales  to  be  filed 193 

Of  telephone  or  telegraph  corporations*  interstate  rates  to  be  filed 192 

Showing  joint  tariffs,  filing  of 188 

Commission  may  change  form  of 187 

Form  of,  to  be  prescribed  by  Commission 186 

Must  be  kept  open  to  public 186 

Where  kept 186 

Seal — courts  must  take  judicial  notice  of 183 

Of  Commission,  form  of 183 

Of  Commission  to  be  affixed  to  papers 183 

Secretary  of  Commission 181 

Securities— conditions  under  which  public  utilities  may  issue 214 

Issue  must  be  authorized  by  Commission 215 

Investigations  by  Commission 215 

Issuance  of,  by  public  utilities  a  special  privilege 214 

Proceeds  from  sale  of  shall  be  expended  as  ordered  by  Commission 216 

Issued  without  order  of  Commission  are  void 217 

Penalty  for  misuse  of  proceeds  of  sale  of 217 

Penalty  for  fraudulent  issue  of 217 

Approval  of,  by  Commission,  no  guarantee 218 

Authority  of  articles  of  incorporation,  vote  of  stockholders  or  directors 
previous  to  taking  effect  of  this  Act  not  sufficient  for  issuing  without 

order  of  Commission 219 

Service — Commission  to  protect  public  from  poor 201 

Improvements  of.  Commission  to  order 202 

Commission  to  regulate  quality  of 209 

Commission  to  regulate  measurements  of 209 

Upon  whom  made,  and  manner  of 225 

Regulation  of  gas,  water,  electricity 208 

Standards  to  be  fixed  by  Commission 201 

Short  title— of  act I7S 

Sites — for  new  structures  may  be  fixed  by  Commission 202 

Sliding  scale— of  charges  permissible i93 

Schedules  of,  to  be  filed I93 

Special  privilege — issuance  of  securities  by  public  utilities,  a 214 

Special  privileges — ^public  utilities  must  not  grant 192 

Spur  connections— duty  of  carriers  to  install 196 


1. 


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W  'I 


I'  ^ 


294 


LOUIS  SLOSS  &  CO. 


PUBUC  UTILITIES  ACT— ConftnueJ 

Page 

Spur  tracks— duty  of  carrier  to  install ...••• 

Power  of  Commission  on  refusal  of  carrier  to  msUll -^ 

Railroads  must  provide  upon  application  provided 9^ 

Stage  and  auto  stage  lines  under  control  of  Commission ^^ 

Stage  lines— joint  rates  with  common  carriers. ^^^ 

Standards  of  service— to  be  fixed  by  Commission •  •  •    ^^ 

Of  service  prescribed •  •  • ^g 

Stationery  to  be  procured  by  Commission ^^ 

Statisticians— employment  of 

Street  car  fare  5  cents  within  city  limits,  except ^il^^'i. 2Q% 

Street  car  lines-Commission  may  order  track  connections  with  railroads 203 

Stock— account  of  moneys  derived  from  sale  of ^^^ 

Approval  of,  by  Commission,  no  guarantee •  •  •  •  • • ;  •  •  •  •  •  • 

AuAority  of  articles  of  incorporation,  vote  of  stockholders  or  directors 
previous  to  taking  eflfect  of  this  act  not  sufficient  for  issmng  without 

order  of  Commission •  • 

Authorized  by  utilities  prior  to  act  and  not  issued ^^ 

Commissioners  or  employees  must  not  own,  except 

Conditions  under  which  public  utiHtics  may  issue 3*4 

Investigations  by  Commission ^ 

Issue  must  be  authorized  by  Commission 5 

Issue  of,  subject  to  regulation ^^ 

Issued  without  order  of  Commission  arc  void ••:'•;       ^ 

May  issue  less  than,  equivalent  to  or  greater  than  authorized  or  subscribed 

capital  stock  *. '.'/"' ."'."     __ . 

No  public  utility  may  acquire  stock  of  other  corporations  without  permission    214 

Of  other  public  utilities,  purchase  of ^J^ 

Penalty  for  fraudulent  issue  of • ^ 

Proceeds  of  sale,  applied  to  purpose  specified ^^ 

217 
When  issue  valid 

When  issue  void • 

Stock  transfers  in  violation  are  void. * 

Stops— power  of  Commission  to  prescnbc ^^ 

Street  car  transfers  must  be  given ^ 

Street  railroad  corporation  defined ^ 

Street  railroad,  defined 

Fare  to  be  charged  within  city ^ 

Subpoenas— issuance  of • ^ 

Suit  to  recover  penalties  not  bar  to  other  action.. »3« 

Summary  proceedings  by  Commission  authorized 230 

Summons — ^issuance  of ;        *  *  *  *         *r  u   V     *♦"      «^ 

Superior  Court-to  compel  attendance  of  witnesses  and  production  of  books,  etc    220 

No  jurisdiction  in  review *^ 


INDEX. 


PUBUC   UTILITIES   ACT— Continued 

Superior  Court—Continued  ^^ 

To  entertain  suits  by  Commission  against  public  utilities 236 

Supreme  Court— exclusive  jurisdiction  to  review  order  of  Commission 229 

Judgment  of— what  shall  contain ^3° 

May  issue  writ  of  mandamus ^^o 

May  order  money  impounded  on  stay  of  order 231 

May  suspend  order  of  Commission 230 

No  new  or  additional  evidence  to  be  introduced  in 229 

Procedure  on  writ  of  review ^ 

Switch  connections— duty  of  carrier  to  install ^^ 

Power  of  Commission  on  refusal  of  carrier  to  install 204 

Switching  service— Commission  may  require  to  private  spurs 204 

Systems— Commission  to  prescribe  form  of ^lo 

Telegraph  corporation,  defined • ^79 

Telegraph  corporations— Commission  may  order  physical  connections 205 

To  file  schedules  of  interstate  rates ^92 

To  transmit  messages  of  another  telegraph  corporation I94 

Telegraph  line,  defined ^ 

Telegraph  messages— free  delivery  of ^™* 

Telephone  corporation,  defined • J  V  *  *  V  *  ^^ 

Telephone  corporation— Commission  may  order  physical  connections,  defined. .  205 

"Long  and  short  haul"  rule  applied  to ^95 

To  file  schedules  of  intersUte  rates ^92 

To  transmit  messages  of  another  telephone  corporation I94 

Telephone  line,  defined ^ 

Telephone  messages— free  delivery  of •  •  ^°^ 

Telephone  and  telegraph  corporations  must  interchange  business  under  certain 

conditions ^^ 

Tender— duty  of  public  utility  on  tender  of  proper  charges 202 

Testimony— tending  to  incriminate ^^ 

Transcript  of,  on  action  to  review  order 226 

Tests  of  service,  gas,  water,  electricity 208 

Time  schedules— power  of  Commission  to  prescribe 203 

Track  connections — ^power  of  Commission  to  order 203 

Traffic— power  of  Commission  to  order  additional  cars  to  accommodate 203 

Train  service— Commission  may  order  sufficient  number  of  trains  to  accommo- 
date traffic ^3 

Commission  may  change  schedules »3- 

Commission  may  change  stopping  places • 203 

Commission  may  make  reasonable  regulations  for  accommodation  of  traffic  203 

Transfer— of  passengers  and  tonnage  between  carriers I93 

Transfers — on  street  cars  must  be  given ^97 

To  be  issued  by  street  railroad *97 


I'     ; 


296 


LOUIS  SLOSS  Ic  CO. 


ft 


PUBUC  UTILITIES  ACT— Continued 

Page 

Transportation — free  and  reduced  rate  prohibited,  except 190 

Free,  of  express  matter,  for  personal  use 190 

Further  prohibitions  regarding  free  or  reduced  rate 190 

In  exchange  for  advertising 190 

Of  property,  defined 176 

Of  persons,  defined 176 

Special  cases  when  free  and  reduced  rate  may  be  allowed 191 

Unreasonable  charges — unlawful  185 

Vacancy — in  Commission,  effect  of 183 

In  office  of  Commission,  how  filled 181 

Valuation  of  property — Commission  may  consider  any  information  available . . .  233 

Commission  shall  file  findings 233 

Hearing  on,  notice 233 

Hearings  had  from  time  to  time 234 

Of  public  utility 233-209 

Commission  to  ascertain 209 

Valuation  of  public  utilities — hearings  by  Commission  to  ascertain 233 

Preliminary  examination 233 

Evidence 233 

Findings  of  Commission  subject  to  review  by  Supreme  Court 233 

Findings  of  Commission  admissable  as  evidence  in  any  action 233 

Further  hearings 234 

Venue — of  action  by  Commission  against  public  utility 236 

Of  action  to  recover  penalties 239 

Vessel,  defined  180 

Warehouseman,  defined 180 

Warrant — of  attachment,  issue  of 219 

Of  commitment  219 

Water   corporation — defined 179 

Water  system,  defined 179 

Wharfinger,  defined 180 

Witness — fees  and  mileage  220 

Process  to  issue  to  enforce  attendance  of 220 

May  be  subpoenaed 225 


INDEX. 


297 


Rules  of  Practice  and  Procedure. 

Page 

Acquisition  of  capital  stock  of  another  public  utility— applications  for 258 

Amendments  of  rules  266 

Answer  to  complaint — form  of 269 

Answer  to  formal  complaint — form  of 270 

"Application"  defined  244 

Applications — general  matters  applicable  to  all 252 

Contents  of  application  252 

Documents  filed  with  application 253 

Procedure  of  Commission  on  filing  of  petition 253 

Applications — miscellaneous 265 

Assignment  of  property — ^applications  for 257 

Bonds — applications  for  order  authorizing  issue  of 259 

Capital  stock — acquisition  of,  of  another  public  utility,  applications  for 258 

Charges — applications  for  permission  to  make  increases  in 262 

Discriminatory,  application  for  permission  to  refund 264 

Excessive,  applications  for  permissions  to  refund 264 

"Commission"  defined 243 

Communications — ^to  Commission    245 

"Complaint"  defined 243 

Complaints — who  may  complain  247 

Contents  of 247 

Signature  of  248 

Copies  of,  to  accompany  complaint 248 

Procedure  of  Commission  on  filing  of 248 

Settlement  of 249 

Answer  to   249 

Procedure  when  complaint  is  contested 249 

Construction — ^new,  or  extensions,  applications  for 255 

Crossings — railroad,  applications  for  construction  of 253 

Alteration  of 253 

Abolition  of 253 

Safety  devices  254 

Data — applications  for  extensions  of  time  to  file 264 

Deviations  from  rules — authorizations  for 265 

Disposition  of  property — ^applications  for 257 

Documents  filed  with  application 253 

Documents — ^to  be  uniform  in  size 246 

Evidences  of  indebtedness — ^applications  for  order  authorizing  issue  of 259 

Extensions,  or  new  construction — applications  for 255 

Extensions  of  time — applications  for 264 

To  file  required  reports 264 

To  file  statements 264 

To  file  data 264 

To  comply  with  Commission's  orders 264 


298 


LOUIS  SLOSS  &  CO. 


U( 


RULES  OF  PRACTICE  AND  PROCEDURE— CoirfmueJ 

Page 

"Financial  Condition"  defined 244 

Financial  condition — stock  authorized 244 

Stock  outstanding  244 

Preferred  stock  244 

Mortgage,  description  of 244 

Bond  issues  244 

Other  indebtedness,  description  of 244 

Interest,  amount  of 244 

Dividends,  amount  of 244 

Earning  statements 245 

Formal  application — form  of 268 

Formal  complaint — form  of 266 

"Formal  Proceedings"  defined 243 

Formal  proceedings — address  of  Commission 245 

Case  numbers 245 

Form  and  size  of  papers  filed 246 

Amendments 246 

Subpoenas 246 

Service  of  papers 246 

Filing  or  entry  and  service  of  orders 246 

Intervention 247 

Forms  prescribed  for  use 266 

Franchises  and  permits — ^applications  for  permission  to  cxtrdse 256 

Hearings  and  rehearings 249 

When  hearing  will  be  given 249 

Notice  of  place  of  hearing 249 

Stipulation  as  to  facts 250 

Procedure  at  hearings 250 

Adjournments 251 

Briefs 25 1 

Investigations  on  Commission's  own  motion 251 

Rehearings 251 

Cases,  classes  of — entitled  to  hearing 249 

Documentary  evidence 250 

Submission  of  briefs 251 

Lease  of  property — applications  for 257 

Long  and  short  haul  rule 263 

Information  required  with  applications  relating  to 263 

Meetings  of  Commission 245 

Mortgage  of  property — applications  for 257 

New  construction,  or  extensions — ^applications  for 255 

Notes — ^applications  for  order  authorizing  issue  of 259 

Notice  of  hearing  on  complaint 271 

Office  in  San  Francisco 245 


INDEX. 


299 


RULES  OF  PRACTICE  AND  PROCEDURE— ConlinucJ 

Page 

Order  to  satisfy — form  of 269 

Orders — copy  must  be  served  upon  defendant 246 

Must  be  in  writing 246 

Of  Commission — applications  for  extensions  of  time  to  file 264 

Permits  and  franchises — applications  for  permission  to  exercise 256 

Petition — ^procedure  of  Commission  on  filing  of 253 

Pleadings — ^may  be  amended 246 

Procedure  of  Commission  on  filing  of  petition 253 

Proceeds  of  sale  securities — ^use  of 261 

Property— value  of,  of  public  utilities 252 

Public  utility— acquisition  of  capital  stock  of  another,  applications  for 258 

"Public  Utility"  defined 243 

Public  utilities— value  of  property  of 252 

Published  notice  of  hearing  on  application — form  of 272 

Railroad  crossings — applications  for  construction  of,  alteration  of,  abolition  of  253 

Safety  devices 254 

Rehearings  (see  Hearings) 249 

Reports — applications  for  extensions  of  time  to  file 264 

Rules — amendments  of 266 

Deviations  from 265 

Safety  devices  at  railroad  crossings — applications  for 254 

Sale  of  property — applications  for 257 

Secretary  to  furnish  information 245 

Service — ^personal * 246 

By  regfistered  mail 246 

Upon  attorney 246 

Sessions  of  Commission 245 

Open  to  public 245 

May  be  held — ^where 245 

Spurs  and  switch  connections — complaints  for 251 

Information  required  with 251 

Map  required  with 251 

Statements— applications  for  extensions  of  time  to  file 264 

Stocks — ^applications  for  order  authorizing  issue  of 259 

Subpoenas — Commission  may  issue  subpoenas  for  the  production  of  records. . .  246 

Switch  connections  and  spurs — complaints  for 251 

Information  required  with  251 

Map  required  with   251 

Value  of  property  of  public  utilities 252 


!'»', 


FJiJ' 


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I 


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^H  Uallett 

^j>ublic  utilities  act  of  California.! 

J  535.3 


Mh  03m  J 


NEH 


aD>i 


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COLUMBIA  UNIVERSrrY  LITOARIES 


JAN  1  4  1930i  ,:,; 


END  OF 

m 

Tinri  c 

I  I  I  LEI 


